EXETER FRIENDLY SOCIETY Group Solvency and Financial Condition

EXETER FRIENDLY SOCIETY

Group Solvency and Financial Condition Report For the year ended 31st December 2019

Approved: 15th April 2020

CONTENTS Executive Summary ...... 5 Section A : Business & Performance ...... 9 A.1 - Business ...... 9 A.1.1 - Business Description ...... 9 A.1.2 - Business Summary ...... 9 A.1.3 - Group Structure ...... 10 A.1.4 - Geographic areas and lines of business ...... 11 A.1.5 - Name and legal form of the undertakings ...... 11 A.1.6 - Name of Supervisory Authority ...... 11 A.1.7 - Auditors ...... 12 A.2 - Underwriting Performance and other KPIs ...... 12 A.2.1 - Underwriting performance ...... 12 A.2.2 - Membership ...... 12 A.2.3 - Earned premium income ...... 13 A.2.4 - Claims and expenses ...... 13 A.3 - Investment Performance ...... 13 A.4 - Future Prospects ...... 14 A.5 - Reinsurance Arrangements ...... 14 Section B: System of governance ...... 15 B.1 - Governance Structure...... 15 B.1.1 - Governance and Risk Committee ...... 15 B.1.2 - Nomination Committee ...... 16 B.1.3 - Remuneration Committee ...... 16 B.1.4 - Audit Committee ...... 17 B.1.5 - Investment Committee ...... 17 B.1.6 - Adequacy of the Governance Structure ...... 18 B.2 – Fit and Proper Requirements ...... 18 B.3 - Risk Management System ...... 18 B.3.1 - Underwriting and reserving risk management ...... 19 B.3.2 - Asset-liability management ...... 20 B.3.3 - Investment risk management ...... 20 B.3.4 - Liquidity risk management ...... 20 B.3.5 - Concentration risk management ...... 20 B.3.6 - Operational risk management: ...... 21 B.4 - Internal Control System ...... 21 B.5 - Internal Audit Function ...... 21 2

B.6 - Actuarial Function ...... 21 B.7 - Outsourcing ...... 21 B.8 - External audit ...... 22 Section C : Risk Profile ...... 23 C.1 - Insurance risk ...... 23 C.2 - Financial Risks ...... 23 C.3 - Risk From Business Operations – “Operational Risks” ...... 25 C.4 - Business Strategy & External Risks ...... 26 C.5 - Risk Monitoring ...... 26 C.6 - Sensitivities ...... 27 Section D : Valuation for Solvency Purposes ...... 27 D.1 - Assets ...... 27 D.1.1 - Intangible assets ...... 28 D.1.2 - Financial assets ...... 28 D.1.3 - Lease assets ...... 29 D.1.4 - Holdings in related undertakings ...... 29 D.1.5 - Deferred tax assets ...... 29 D.2 - Technical provisions ...... 29 D.2.1 - Main assumptions within technical provisions ...... 29 D.2.2 - Interest rates and inflation ...... 30 D.2.3 - Expenses ...... 30 D.2.4 - Lapse assumptions ...... 30 D.2.5 - Claims Assumptions ...... 30 D.2.6 - Technical provision calculation methodology ...... 31 D.2.7 - Uncertainty associated with the value of technical provisions ...... 31 D.2.8 - Solvency II and IFRS valuation differences ...... 31 D.3 - Other liabilities ...... 34 D.4 - Alternative methods for valuation ...... 34 D.5 - Employee benefits ...... 34 E : Capital Management ...... 36 E.1 - Own funds (Society, ECP and Group) ...... 36 E.1.1 – Risk Appetite ...... 36 E.1.2 - Restrictions on use of capital ...... 37 E.1.3 – Difference between Own Funds and IFRS equity ...... 37 E.1.4 - Treatment of intra-group transactions ...... 37 E.2 – SCR and MCR ...... 37 E.2.1 - MCR Calculations ...... 37

E.2.2 – SCR calculation on a Pillar 1 basis ...... 38 E.2.3 - Current own funds position against SCR ...... 40 E.2.4 – Overall own funds position against SCR ...... 41 E.2.5 - Stress Testing Of Capital Requirements ...... 42 E.3 - Use of duration-based equity models ...... 42 E.4 - Differences between the standard formula and any internal models used ...... 42 E.5 - Non Compliance with SCR or MCR ...... 42 Appendix I – List of submission data ...... 43

Executive Summary

The Board of Exeter Friendly Society (“The Society”) and its subsidiary The Exeter Cash Plan (“ECP”) have prepared this Solvency and Financial Condition Report (“SFCR”) which sets out summary information on the risks faced by The Society and ECP, its management controls and the level of solvency it is required to hold. This report covers The Society and ECP as solo entities as well as the Society and its subsidiaries consolidated on a group basis. The headings used are as prescribed in the relevant regulations and cover the business activities, governance, risks, assets and capital management.

Performance summary

Performance during the 2019 financial year has been positive, despite tough market conditions, compounded by the continuing uncertainty surrounding the ongoing Brexit negotiations.

The Exeter has again withstood some challenging conditions to deliver solid growth against a backdrop of global uncertainty, an uncertain Brexit situation, increasing regulatory requirements and a highly competitive insurance sector.

With a clear, focussed strategy and a highly dedicated team, we have delivered a significant number of projects and improvements. We remain committed to working hard for our members with some standout results in terms of industry recognition and customer service.

We have continued to invest across our entire business, not only in products, but also in relation to the optimised service our members enjoy. With a focus on continuing to improve our member experience, it is in the areas of value-added services and digital claims that The Exeter has made significant gains over the past year.

Real Life

Real Life, our life insurance product for customers who have suffered from serious or multiple health conditions, was expanded to the whole of market during 2019 taking a bold step to make protection accessible and inclusive for more people. I’m very proud to say that we have offered terms to the majority of applicants to Real Life. Many people previously refused life insurance may have thought their medical history had meant that the protection they and their families needed was out of reach.

Industry Excellence

While the market continues to be extremely competitive, in 2019 we have received several prestigious industry accolades for both our products and our service; • Winner – Best Individual Life Insurance, Cover Excellence Awards 2019 • Winner – Doing it Better, Protection Review Awards 2019 • Winner – Best Private Medical Insurance, Cover Customer Care Awards 2019 • Winner – Customer Service ‘Above and Beyond’, Cover Customer Care Awards 2019 • Highly Commended – Best Healthcare Service, ILP Moneyfacts Awards 2019 • Highly Commended – Claims Management Team, Cover Customer Care Awards 2019 • Highly Commended – Underwriting Team, Cover Customer Care Awards 2019 • Commended – Best Income Protection Provider, ILP Moneyfacts Awards 2019

Being recognised by our peers in this way is further reinforcement of our strong reputation in the market.

Brexit

There is ongoing uncertainty around Brexit and the transition to exit from the EU. This is an area the Board will continue to monitor to assess the potential impact on our members resident in the EU. The Exeter is not directly regulated in the EU countries in which Policyholders reside but operates its private medical business under a special regime agreed between the UK and the EU.

Whilst an orderly exit would allow us to more effectively address the consequence of change against a defined timeframe, we have identified some areas for the Board to continue to monitor: • Operational complexity in respect of those Members who reside in the EU. • Including continuity of the provision of cover to EU Members impacted by Brexit. • Investment market volatility. • Increased costs as a result of more demanding regulatory compliance.

Delivery of benefit to members

HealthWise

In 2019 we launched HealthWise to all members of The Exeter. HealthWise, which offers quick and convenient medical advice and treatments at no added cost, helps all our members to get value from their policy every day without impacting their premiums or no claims discount.

We have been delighted to see consistent downloads of the HealthWise app during the year with a strong uptake on the usage of services available. In particular the popularity of physiotherapy and mental health services, has demonstrated the immense value of this member benefit.

Digital Claims

More recently, The Exeter has significantly improved our service for Income Protection members in regard to the submission of claims with the introduction of a digital claims process. The process for submitting a member's claim is the real test for our Society, so it is critically important to make the process as fast and painless as possible. In today’s digital world, everyone expects fast and efficient on-line solutions, and this technology has helped us deliver this to members.

We intend to remain on the front foot in further developing collaborative opportunities and capitalising on our digital capability to provide meaningful benefits to members.

Community

As a mutual, we believe that community support is an essential part of our proposition. As a business we have always looked to facilitate strong community partnerships and support for those local and small not-for-profit groups in the Exeter area. In 2019 the society donated over 6

£50,000 to these causes and we will continue to engage our staff in community programmes so that together we can all make a positive impact.

Economic and regulatory landscape

Financial markets remained volatile in 2019 due to ongoing uncertainty over the impact that Brexit will have on the economy and on the UK’s future relationship with the European Union, as well as global macroeconomic concerns.

In line with its stated strategy of expansion through acquiring suitable books of business, the Board has continued to review possibilities as they emerged in 2019 and will continue with this strategy.

During 2019, the society implemented the changes that it needed to make in order to comply with new requirements under Supervisory Statement 5/19 (Liquidity Risk). The regulatory landscape continues to evolve and in 2020, the society will focus on delivering IFRS17, which results in significant changes in the way that we report our accounting information.

Solvency Coverage

Our percentage coverage of our pillar 1 SCR capital is a measure of the financial strength of the organisation. We aim to maintain this above 130% in each of our funds. This changed in 2019 as follows • Long term business fund decreased from 152% to 143%. This change was expected and is the result of increasing new business. • General business fund decreased from 520% to 474%. Again, this change was the result of increasing new business. • Cash plan was broadly unchanged, showing a modest increase from 390% to 391%.

More detail on solvency capital coverage is given in section E2.3.

Future plans

For the foreseeable future, the Board continue to be committed to the stated strategy of growing the business through organic growth and by providing innovative, leading cover in our core markets. We continue to expand our distribution channels and work closely with business partners to ensure that products are relevant, competitive and meet the changing needs of prospective members.

The Board also continue to seek strategic mergers and acquisitions with organisations within core markets where synergies and increased scale would benefit members and market position.

Throughout this period of strategic growth, the Board will ensure that the Society continues to provide the best customer service it possibly can, building on an already strong reputation. These objectives will be supported by investing in the required IT support systems and by continuing to recruit, train and retain an able and committed workforce as well as an excellent executive and management team.

Major development since 31 December 2019 - COVID-19 The coronavirus (COVID-19) has been identified as a risk, and we are monitoring its impact on our business, members and employees. There is uncertainty over the magnitude of the economic slowdown that will result from this pandemic. Our primary focus is on ensuring the safety and wellbeing of our employees and members. We have invoked our business resilience plans to help support both employees and members to ensure we sustain our usual quality of business operations. At this time, we do not believe that COVID-19 will have a material adverse impact on The Exeter’s financial strength or result in The Exeter being unable to meet its capital requirements. There has not been an impact on our operations and as a result of the Government advice to ‘stay at home’, all our departments were successfully managed and transferred to remote working, demonstrating our operational agility at very short notice. Since the start of 2020 and the continuing development of COVID-19, there has been an increase in claims but again we do not believe the overall impact of these claims will be material. In respect of our excess asset investments, at the end of February 2020 we had £19m of our excess assets invested equities. We are actively continuing to monitor the COVID-19 impact on the business. The impact of COVID-19 is explored in more detail throughout this report. It should be noted that all figures presented at the end of 2019 and that the attached QRTs have NOT been adjusted for the potential impacts of COVID-19.

Statement of Directors’ Responsibilities We acknowledge our responsibility for preparing the group SFCR in all material respects in accordance with the PRA Rules and the Solvency II Regulations.

We are satisfied that: a) throughout the financial year in question, the group has complied in all material respects with the requirements of the PRA Rules and the Solvency II Regulations as applicable at the level of the group; and b) it is reasonable to believe that the group has continued so to comply subsequently and will continue so to comply in future.

Section A : Business & Performance

A.1 - Business

A.1.1 - Business Description The parent Society is operated as two separate sub funds as required to split long term and general business. All costs are allocated to these sub funds and to the single operating subsidiary in line with the actual resources used. The bulk of the business is undertaken within the parent company but there are five wholly owned subsidiaries within the group. These are outlined as follows: • Exeter Cash Plan Holdings Limited - 100% owned subsidiary which is the intermediate holding company for The Exeter Cash Plan • The Exeter Cash Plan - Provider of cash plan policies. 100% owned by Exeter Cash Plan Holdings Limited • Go Private Limited – 100% owned dormant subsidiary • Exeter Friendly Members Club Limited, a wholly owned dormant subsidiary • Pioneer Advantage Limited, a wholly owned dormant subsidiary

All operating companies share a common governance structure and operate under two PRA registrations; one for the main Society and one for The Exeter Cash Plan.

A.1.2 - Business Summary The Group’s insurance businesses consist of both general and long term elements, the former represented by its books of Private Medical Insurance (“PMI”) and Health Cash Plan (“HCP”) business and the latter through its Income Protection (“IP”) policies and Managed Life (“ML”) policies. All insurance policies are underwritten by the Group and sales of new policies are distributed primarily through Independent Financial Advisers and broker networks. Policies are administered by the Society with two functions being outsourced. Firstly, the Health Cash Plan business is administered by The Wessex Group, as specialist in this area; and secondly private medical claims are processed on the Society’s behalf by AXA. The arrangement with AXA was implemented during 2016 to improve customer service and benefit from economies of scale to reduce claim costs. There are no proposals for any significant changes in these existing activities, but the Board explores opportunities to launch new products and enter new distribution channels as they emerge. As a result of this, the new long term products, ‘Managed Life’ and ‘Real Life’ were launched in May 2017 and November 2018 respectively. The Society operates in a competitive market. Price and broker relationships are the main drivers but the Society also sees the importance of service to both customers and brokers, and therefore has invested in developing these areas. The income protection market is competitive, but the Society does have an established foothold in that product and has maintained its market position over time. The launch of new products in late 2016 enhanced this position.

The private medical and cash plan markets are more challenging and aggressive competition makes it difficult to grow market share. The ability to compete on price and commission is hampered by size and the Society has therefore welcomed the opportunity to outsource claims procurement to AXA, which went live in November 2016. Our PMI proposition was refreshed in September 2018 with the launch of our ‘Health+’ product and the closure of our existing PMI product range to new members. Interest rates remained at historically low levels and this has a significant impact on the Society as its long term insurance liabilities are estimated using a discount rate which is prescribed by Solvency II regulation. In order to reduce risk, the Society endeavours to match these long term liabilities with assets which behave in similar ways to the liabilities. Such matching is never perfect, but this policy has been successful during 2019. The Society is well-placed to resume its strategy for growth, as described in more detail below. The Board agreed five key strategic objectives, in order to deliver on its vision for the Society to become the Protection Provider of Choice for its customers and distribution partners through the development of quality products, simple processes and efficient services: • To continue organic growth of the PMI business; • To continue organic growth of the IP business; • To develop further products to enhance the Society’s offering in the market; • To maintain and continue to develop a robust, scalable and cost effective infrastructure; and • To seek to grow the business through merger and acquisition opportunities. By seeking to expand the business through the sale of innovative and viable policies, the Board aims to generate and preserve value for our members over the long term, thereby providing a firm capital base on which to support future growth.

A.1.3 - Group Structure The Group structure is as follows:

Exeter Friendly Society Limited

The Exeter Cash Plan Exeter Friendly Members Pioneer Advantage Go Private Holdings Limited Club Ltd Limited Limited

The Exeter Cash Plan

A.1.4 - Geographic areas and lines of business At 31st December 2019 the Society had 4 lines of business; Income Protection Insurance, Term Life Insurance, Health Cash Plans and Private Medical Insurance. Income Protection, Term Life Insurance and Health Cash Plans are sold only within the UK. Private Medical insurance is only sold within the UK but legacy products are still held by individuals in many countries but with a concentration within the EU.

A.1.5 - Name and legal form of the undertakings Both Exeter Friendly Society Limited (“The Society”) and The Exeter Cash Plan (“ECP”) are incorporated in the United Kingdom and registered in England. Their Registered Office Address is: Lakeside House Emperor Way Exeter Devon EX1 3FD

This Solvency and Financial Condition Report (“SFCR”) covers Exeter Friendly Society Limited and its subsidiary The Exeter Cash Plan on a solo basis, as well the Society and its subsidiary companies consolidated on a group basis.

A.1.6 - Name of Supervisory Authority The Society and ECP are authorised by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority and the Prudential Regulatory Authority.

The Prudential Regulatory Authority (“PRA”) can be contacted at: Prudential Regulatory Authority Bank of England Threadneedle Street London EC2R 8AH

The Financial Conduct Authority (“FCA”) can be contacted at: Financial Conduct Authority 25 The North Colonnade London E14 5HS

A.1.7 - Auditors The auditors of the Society and all Subsidiaries within the Group are: PricewaterhouseCoopers LLP 2 Glass Wharf Bristol BS2 0FR

A.2 - Underwriting Performance and other KPIs

A.2.1 - Underwriting performance The Board monitors a number of key performance indicators to measure its success in delivering its strategy for the business, including growth in sales, premium income, membership, claims, operating expenses and reserves.

A.2.2 - Membership Sales of new PMI policies increased during 2019, but coupled with an increase in policy lapses, resulted in a fall in the number of members with PMI policies by 900 from 24,647 to 23,747 during the year. By contrast, IP membership showed a 3,702 increase on the previous year from 41,686 to 45,388 members at the year end. HCP sales continued to be lacklustre in 2019 showing an overall decrease in numbers from 27,231 at the end of 2018 to 24,050 at the end of 2019. The cash plan market is dominated by two very large players with high marketing profiles and so management have focused on maintaining rather than increasing sales of this product for this low premium, low benefit product. Sales of the new life protection products showed a steady increase in 2019 and we expect this to continue to increase as the product offering has been widened. Overall, therefore, the membership base showed an increase on previous years, with total membership of 98,237 (2018: 95,127) at the year end.

A.2.3 - Earned premium income

Total earned premiums for 2019 amounted to £67.9m compared to £65.1m for 2018. The individual product line performance was as follows:

• Sales of new Income Protection policies were 16% higher than in 2018 ending the year at £4.8 million. Overall gross written IP premiums recorded an increase of 7% to £24.2 million for the year.

• Sales of new Life Cover policies were £3.5m in 2019, up from £1.2m in 2018.

• New Private Medical Insurance sales totalled £3.2 million, an increase of 102% compared to 2018. Gross written premiums reduced by 3% to £37.5 million during the year.

• The Cash Plan business contributed £3.5 million gross written premium compared to £3.7 million in 2018.

• Total new business sales increased from £7.5m in 2018 to £12.0m in 2019, an increase of 60%

A.2.4 - Claims and expenses PMI benefits and claims decreased by 6.3% to £29.2 million, partly as a result of the reduction in size of the book of business, but also due to the continued benefits of outsourcing PMI claims. Gross IP benefits and claims totalled £9.0 million, a 17.6% increase on 2018. On a net basis, after allowing for reinsurance recoveries, there was an increase of 1.5% to £5.3 million. Benefits paid on the HCP business amounted to £2.9 million, bringing the total claims paid out for the Group to £41.0 million (2018: £41.8 million).

At Group level the commission payable to intermediaries increased by 47.9% to £14.6 million, this has been driven mainly by the increase in sales of Life policies. Net operating expenses increased by 35.4% from £16.0 million to £21.7 million (2018: 17.0%), largely as a result of increased new business sales.

A.3 - Investment Performance The Society updated its investment strategy in 2018 allowing an increased investment in corporate bonds. Investment in gilts was reduced and gilts are now only held to match policy liabilities. The Society’s investments remain well aligned with its capital adequacy requirements under the new Solvency II regime and it will continue to refine its investments in accordance with the solvency framework. Matching of assets to liabilities is achieved by investing in assets of similar maturity duration to the underlying cash flow requirements of the insurance liabilities. The Society has a policy of not using equities to match any insurance liabilities and therefore any such investments are made out of free assets. Investment markets performed very well during 2019 with a net return of £11.7m. This was driven in part by reductions in interest rates, which increased reserves. In all years, gains or losses on investments were partially offset by movements in reserves.

2019 2018 2017 Investment Income £2.6m £2.4m £2.7m Net gains(losses) on investments £9.1m (£3.6m) £2. 3m Total return £11.7m (£1.2m) £5.0m Reserve movement due to interest rates £5.8m (£0.5m) £0.9m

A.4 - Future Prospects As a mutual, the Society puts the interests of its members at the heart of how it does business and, to support this philosophy, the Board endeavours to ensure that products and services are designed and delivered in accordance with the needs of those members. The Society performed well in 2019, delivering £12.0m of new sales. This is an increase of 60% on 2018 and was our 4th consecutive year of new business growth, despite continuing competitive market conditions. The Board believes that the Society is well-placed to achieve growth through innovation of our existing product range. The Society has continued to invest in its infrastructure and systems and, subject to the economic impacts of COVID-19, is well placed to continue to pursue growth over the medium term As a UK-based insurer, with a number of members resident in the EU, we have reviewed how to continue to service this business, whilst looking after the interests of all our members. We have informed those policy holders involved that if no deal is agreed with the EU to provide ongoing arrangements then we may no longer be able to offer these policies within the EU but we will seek to identify other insurers who can continue cover. The move to an intermediary-focused distribution model has proved to be a very successful strategy, which has delivered growth over the period and stabilised the Society’s cost base. The Board believes that this is a good platform from which to now grow the business. COVID-19 is likely to have a material impact on our future prospects. The most significant impacts are noted below • Since the end of 2019, investment performance has been heavily influenced by the economic impact of COVID-19. From 31 December 2019 to 31 March 2020, the total return was around (£6.0m). • We anticipate an increase in IP and life cover claims as a result of COVID-19. We have modelled a stressed scenario and it is the best estimate of the Directors that the Society will be able to satisfy its regulatory solvency requirements even in adverse scenarios. • We anticipate depressed economic conditions to prevail for some time. This is likely to have a negative impact on future new business growth. The Directors continue to monitor the situation and will make appropriate changes to strategy as the impact of COVID-19 becomes clearer.

A.5 - Reinsurance Arrangements The Society reinsures its Income Protection products with Pacific Life Re and Swiss Re and Term Life Insurance products with Swiss Re. Private Medical Insurance and Cash Plan are not reinsured.

Section B: System of governance

B.1 - Governance Structure The Board’s role is to provide entrepreneurial leadership of the Society within a framework of prudent and effective controls which enables risk to be assessed and managed. The Board sets the Society’s strategic aims and ensures that the necessary financial and human resources are in place in order for the Society to meet its objectives and review management performance. In addition, the Board sets the Society’s values and standards and ensures that its obligations to members and others are understood and met. The Board has a general duty to ensure that relevant legislation and regulations are adhered to, and that proper accounting records and effective systems and controls are established, maintained, documented and audited to safeguard members’ interests. The Non-Executive Directors are responsible for bringing independent judgement to discussions held by the Board, using their breadth of experience and understanding of the business to constructively challenge and help develop proposals on strategy. There is a formal schedule of matters specifically reserved for the Board’s decision and a Corporate Governance Handbook sets out its responsibilities and the structure of delegation of authority by the Board to management. The Board has established five principal Committees, under its overall authority, to deal with certain functions in detail. These Committees cover the following functions: • Governance and Risk • Nomination • Remuneration • Audit • Investment In addition to Committee Meetings the Board holds eight formal Board meetings each year including a whole day devoted to the development of strategy. Each Board meeting includes a consideration of the Society’s performance against its strategic objectives, with corrective action proposed as required to ensure that the business remains on target to achieve them. In addition, the Non-Executive Directors meet on one occasion without the Executive Directors and on a further occasion without the Chairman present. The attendance record during the year of Directors at formal meetings of the Board and its Committees is reported within the Annual Report. The Main Board comprises a non-executive Chair, four other non-executive directors and four executive directors. The Main Board is supported by an Executive Board which comprises five Executive Directors plus two other function Heads. This committee is in turn supported by other committees comprising senior managers within the business. All such committees have formal terms of reference, agendas, full minutes and specific action points. The board and its committees continue to meet through the COVID-19 lockdown using video conferencing facilities. B.1.1 - Governance and Risk Committee The Governance and Risk Committee is appointed by the Board on the recommendation of the Nomination Committee. As recommended by the Association of Financial Mutuals UK Corporate

Governance Code (the “Code”), the majority of members of the Committee are independent Non-Executive Directors. The purpose of the Committee is to ensure and provide assurance to the Board that the Society’s risk management strategies and governance arrangements are appropriate in respect of the type of business it transacts, the market in which it operates and the regulatory regime by which it is assessed. In discharging its responsibilities, the Committee reviews, approves and monitors internal risk and compliance strategies and reports, and manages the process to ensure that the Own Risk Solvency Assessment (“ORSA”) has the content required by the Board. The Committee meets at least three times a year, at appropriate times in the reporting cycle. The Chief Risk Officer and Head of Compliance both have direct access to the Committee and its Chairman and they meet at least once a year with the Committee, without the Society’s management present. The Committee has the additional responsibility of providing oversight of the Society’s governance and regulatory compliance arrangements and monitoring their on-going effectiveness. In this regard, the Committee regularly reviews reports from the Compliance Function including the outcomes and recommendations arising from its monitoring programme. The Committee also reviews the Society’s arrangements for its employees to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters.

B.1.2 - Nomination Committee The Nomination Committee regularly reviews the structure, size and composition of the Board, in particular the range and balance of skills, knowledge and background on the Board, and considers succession planning for Directors. The Committee is responsible for identifying and nominating, for the approval of the Board, candidates to fill Board vacancies as and when they arise. Prior to the Board recommending a Non-Executive Director for re-election at the Annual General Meeting, the Committee considers their appointment giving due regard to their performance, continuing commitment to the role and ability to contribute effectively to the Board and to ensure the continuing balance of the Board. On the basis of the above criteria the Committee considers that the current Board is appropriate for the needs of the business.

B.1.3 - Remuneration Committee The remuneration of the Executive Directors is set by the Remuneration Committee and is based on the following principles:

• Executives are rewarded for creating long term value for the Society and hence its members; • Performance related rewards form part of the total remuneration package; • The remuneration package is competitive in the market in which the Society operates; • Failure is not rewarded; and • Contractual terms are agreed which ensure that, on termination, payments are fair to the individual and the Society.

Further detail on remuneration for Executive Directors is included in the annual report and accounts. B.1.4 - Audit Committee The Audit Committee is appointed by the Board on the recommendation of the Nomination Committee. As recommended by the Code, all three members of the Committee are independent Non-Executive Directors and at least one member has recent and relevant financial experience. The Audit Committee Chairman is appointed by the Audit Committee. The purpose of the Committee is to assist the Board in discharging its responsibilities for the integrity of the Society’s financial reporting, the quality of the external and internal audit processes and the appropriateness of the Society’s system of internal financial controls. The Committee meets at least three times a year, at appropriate times in the reporting and auditing cycle. The independent auditors and the Chief Internal Auditor both have direct access to this Committee and its Chairman and they meet at least once a year with the Committee, without the Society’s management present. The primary role of the Committee in relation to financial reporting is to review with both management and the external independent auditors the appropriateness of the annual financial statements concentrating on, amongst other matters:

• the quality and acceptability of accounting policies and practices;

• the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements;

• material areas in which significant judgements have been applied or there has been discussion with the external independent auditors;

• whether the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for members to assess the Society’s position and performance, business model and strategy; and

• any correspondence from regulators in relation to the Society’s financial reporting.

To aid its review, the Committee considers reports from the Chief Internal Auditor, the Finance Director, the society’s actuaries and also reports from the external independent auditors on the outcomes of their annual audit. The internal audit function also advises the Committee on the effectiveness of the Society’s internal control systems, the adequacy of those systems to manage business risk and to safeguard its assets and resources. The committee approves this SFCR, including the templates in appendix 1.

B.1.5 - Investment Committee The Committee draws up and regularly reviews Investment Guidelines and recommends investment policy to the Board, including the review and approval of established limits for investments and the review and approval of credit policies including investment and

17 counterparty liability, taking advice from the in-house actuarial team and other appropriate financial advisers. The Committee monitors the performance of the Investment Managers against the agreed benchmarks including its policy for compliance with the principles of the Stewardship Code. Royal London Asset Management was appointed as the Society’s Investment Managers in 2011, following a selection process that was overseen by the Committee. A separate contract is in place with HSBC Bank Plc for the provision of custodial services for the Society’s investments.

B.1.6 - Adequacy of the Governance Structure The Society monitors and assesses its system of governance on an ongoing basis as described in the above sections and believes it to be robust.

B.2 – Fit and Proper Requirements The Committees outlined above set the policies and processes to be implemented throughout the organisation. In order for this to happen the Society must be staffed by individuals with the appropriate skills and training. Significant emphasis is placed on recruiting the right people and then ensuring that they adhere to the Society’s regulatory and operational processes. B.3 - Risk Management System The Board is responsible for determining strategies for risk management and control. Senior management are responsible for designing, operating and monitoring risk management and internal control processes and the Governance and Risk Committee, on behalf of the Board, is responsible for reviewing the adequacy of these processes. The Committee is also responsible for ensuring that appropriate risk management systems are in place across the business and that there is an on-going process for identifying, evaluating and managing significant risks faced by the Society. This process is regularly reviewed at Board level, any risk related issues that are identified are investigated and, if necessary, additional compliance or internal audit resources are utilised. Given the risks faced by the organisation and the nature of its products the Board believe a Standard Formula approach in respect of calculation of capital requirements under Solvency II is appropriate and this has been documented in the ORSA. The review process for the ORSA means that this assumption is regularly challenged. The Board has approved a Risk Appetite and Risk Register, which are regularly reviewed and form the basis of discussion and decision-making. The internal audit function, reporting to the Audit Committee, provides independent and objective assurance that the Society’s risk management processes are appropriate and are applied effectively. The Governance and Risk Committee also devotes a significant amount of its time to ensuring that the Society meets its obligations under Solvency II with a focus on the methodology and assumptions for the Solvency Capital Requirement calculations, the review of the Society’s Own Risk and Solvency Assessment Report and ongoing quantitative reporting requirements. A key starting point in the consideration of risk and solvency is the setting of the Society’s risk appetite policy and the tolerance limits that are required and acceptable. Risk Appetite is set on an annual basis by the full board and is then used to assess the overall solvency needs derived from the ORSA. If the Board perceives a change in the risk appetite is required due to specific events or environmental changes then the risk appetite will be reviewed immediately. Once 18 set the Risk Appetite is used to assess the Society’s exposure through management information, the ORSA and new project evaluation. The Society has three lines of defence in risk management: • The operational management of the Society makes up the first line of defence by assessing risk and implementing day to day controls. • The Risk Management and Compliance functions provide oversight and challenge to form the second line of defence. This includes compliance checks and risk monitoring. • Internal Audit provides independent assurance that the risk management framework and internal controls are fit for purpose and effective. When appropriate, specialist external resource may be utilised to provide expert assurance e.g. in respect of auditing actuarial activity. (See section B5, below for further detail about Internal Audit.) Risk Management is headed by the Chief Risk Officer but primary responsibility for the identification and monitoring of risk sits with department heads who form the first line of defence. Regular reviews of the risk register are undertaken, and monthly risk reports are discussed by the Executive Board and quarterly risks reports are discussed by the Main Board. Any issues arising from the review of the risk report are minuted and appropriate actions are taken. The Chief Risk Officer Role is key to the development and implementation of risk management. The Chief Risk Officer reports regularly to the Executive Board and the Governance and Risk Committee and in order to maintain the independence of the Chief Risk Officer, this role reports jointly to the chair of the Governance and Risk committee and the Chief Executive Officer. The Compliance functions are managed by the Head of Compliance, who undertakes an agreed program of work designed to provide comfort on our regulatory compliance. This function also includes the handling of complaints and breaches. The resources involved in Risk, Compliance, Audit and Actuarial amounted to a total of 14 staff out of a total average number of staff for the year of 148. Roles and responsibilities are clearly defined and allocated to specific individuals in accordance with the Senior Insurance Management Functions regime. The governance of specific risks is outlined below.

B.3.1 - Underwriting and reserving risk management

To mitigate underwriting risks the Society asks relevant questions of its applicants and these are processed in accordance with documented underwriting philosophies. This may include automated underwriting which, depending upon conditions, leads to policies being offered, declined or earmarked for review by an experienced underwriter. Certain private medical policies are offered on a moratorium basis and in these cases applicants must be able to answer certain qualifying questions. Whilst some legacy products were issued without reinsurance the majority of long term policies were written with reinsurance since 2007 and all current long term new policies are reinsured to mitigate risk. Reinsurance is used to protect the Society against large individual claim risks, adverse experience in any one product line and to provide additional expertise within a particular line of business; such as the new Managed Life and Real Life products.

Detailed modelling of all pricing assumptions is undertaken before a product is launched and this is repeated on a regular basis to ensure that pricing and reserving continue to be appropriate. Claims are managed by a dedicated in-house team for long term products whilst the claims functions for cash plan and private medical products are outsourced with close review and supervision by the Society.

B.3.2 - Asset-liability management The Society aims to match its interest rate and market risks with specific assets to counteract these risks. Risk mitigation is achieved by matching the duration of investments to the expected cash flow requirements of the funds. This asset and liability matching cannot be exact due to the uncertainties involved but is reviewed regularly and adjustments made to the portfolio allocation if required.

B.3.3 - Investment risk management A detailed investment policy is approved by the Board annually and is reviewed by the management team on a monthly basis to ensure that the external investment managers are complying with the stated policy. The investment policy sets out requirements for asset liability matching and the investment of free assets over and above those used to match liabilities. Insurance liabilities are matched by cash deposits and investments in fixed interest securities. Equities do form part of the portfolio but only form part of the allocation of free assets. The investment policies are set alongside detailed guidelines for each asset class and these are monitored monthly within set bands. The investment manager therefore does have discretion within these bands but must correct the portfolio if limits are breached. In the case of fixed interest investments and cash deposits the Society reviews the credit ratings of the counterparties involved. There are no direct holdings in derivatives but some collective schemes in which the Society invests may have small exposures. These are disclosed in the Society’s regulatory returns on a look through basis.

B.3.4 - Liquidity risk management The Society models its cash flow and liquidity management as part of the business planning process and this is updated and reviewed monthly to ensure that sufficient liquid resources are available to run the business and meet members claims as they fall due.

B.3.5 - Concentration risk management The concentration of risk is assessed as part of the ORSA process and any exposures which are deemed to be too high for the risk appetite are reviewed and reduced if necessary.

B.3.6 - Operational risk management: Operational risk is formally reviewed and reported quarterly but if any issues arise, they are reported to the Chief Risk Officer immediately and appropriate action taken. Operational risk is discussed as part of the senior management team and the Executive Board monthly meetings. All risks are allocated to a risk owner by the Chief Risk Officer and that owner is responsible for the on-going monitoring and management of that risk.

B.4 - Internal Control System The Society has identified the processes and controls required within its operations to ensure that business risks are addressed and assets are safeguarded. In doing this all key operations are documented and flowcharted to assess the risks that they link to and the controls that are in place. Each control is allocated to a specific individual or role and these controls are subject to review by internal and external audit and the compliance department.

B.5 - Internal Audit Function The internal audit function advises management on the effectiveness of the Society’s internal control systems, the adequacy of those systems to manage business risk and to safeguard its assets and resources. The internal audit function provides objective assurance on risks and controls to the Audit Committee. The Committee directs the internal audit plan to cover areas of risk and concern and this is kept under regular review. It also conducts a regular review of the effectiveness of the internal audit function and ensures that it has sufficient resources to carry out its duties effectively.

B.6 - Actuarial Function The Society employs an in-house team of actuaries who are responsible for the assessment of insurance related risks within the Society. This work includes product pricing, experience analysis, the quantification of actuarial reserves, technical provisions and capital modelling.

B.7 - Outsourcing The Board acknowledges that it is responsible for the actions of its subcontractors and therefore has an outsourcing policy with appropriate controls for due diligence, contracting and monitoring performance. The Society has two material outsourcing arrangements relating to the Cash Plan operations and the handling of private medical claims. Cash Plan operations are outsourced to The Wessex Group who carry out all day to day processing of cash plan claims and premium collections. In addition, the Society also outsources all private medical claims handling to AXA. Both of these key outsourcers are domiciled in the UK. Daily management information is reviewed for each of the outsourcing arrangements and regular review meetings are held with outsourcers to review contracted performance indicators and any issues that have arisen during the month. Any corrective action or revisions to service standards is agreed as required.

B.8 - External audit The Audit Committee oversees the Society’s relationship with and monitors the performance of the external independent auditors and makes recommendations to the Board in relation to their appointment, reappointment or removal. These recommendations are then put to the members for approval at the Annual General Meeting. PricewaterhouseCoopers LLP has held the position of the Society’s independent auditors since 2008. In accordance with the Code, it is a policy of the Committee to conduct a tender exercise at least every 10 years. The Audit Committee decided to undertake this tender exercise in 2017 and several auditors were approached, including PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP were re-selected by the Audit Committee and are subsequently re-appointed each year as The Exeter's auditors by members voting each Annual General Meeting (AGM). The Society has policies in place which aim to safeguard and support the independence and objectivity of the external independent auditors. One such policy requires the prior approval of the Board for the engagement of the independent auditors for non-audit work. The independent auditors are not normally engaged to provide any other services in line with current standards. Where other services are provided from time-to-time, these are limited in scope so that they would not compromise the independence of the audit and the total spend on these services is limited to be no greater than the cost of the independent audit. The effectiveness of the external audit process is assessed as part of the Audit Committee’s annual effectiveness review, which takes the form of a survey issued to the Committee members and regular attendees. The Chairman collates the findings of the effectiveness review and ensures that any issues relevant to the audit process are acted upon.

Section C : Risk Profile There are four types of risk to which The Exeter is exposed: 1. Risks customers transfer to us – “Insurance Risk”; 2. Financial Risks we incur; 3. Risks from Business Operations; and 4. Business Strategy and External Risks.

Each of these basic risk types encompasses a significant number of specific risks that we, as an organisation, need to identify, quantify, manage, monitor and report. Risks are mitigated through the operation of appropriate internal controls and the use of reinsurance for long-term products. Risks and their associated mitigation and control are discussed in more detail below. Quantification of risks is included in the table in section E.2.2

C.1 - Insurance risk These are the life events for which we provide protection to our members viz: 1. Mortality / Critical Illness; 2. Health (i.e. healthcare costs); and 3. Morbidity. As a result of protecting against these life events, we also carry Persistency (Lapse) Risk which is included within the same classification for ease of reference. Underwriting mitigates the inherent insurance risk arising from the uncertainties involved in the occurrence, amount and timing of insurance liabilities. Long term insurance risk arises from morbidity, persistency and expenses variances. General insurance risk arises from risks in general insurance contracts which lead to significant claims in terms of quantity or value. Systems are in place to measure, monitor and control exposure to all these risks. These are documented in policies for underwriting, pricing, claims and reinsurance. To mitigate risk in the long term business fund the Society uses reinsurance to protect the Society against large individual claim risks, adverse experience and to provide additional expertise. We anticipate an increase in mortality and morbidity claims as a result of COVID-19. We have modelled a stressed scenario and it is the best estimate of the Directors that the Society will be able to satisfy its regulatory solvency requirements.

C.2 - Financial Risks There are three main financial risks that we incur, viz: 1. Credit; 2. Market (including interest rate risk); and 3. Liquidity

C.2.1 Credit Risk Credit Risk relates to credit defaults or expected defaults from/of counterparties with whom we invest funds resulting in uncertainty of investment returns. In this context, investing funds also encompasses reinsurance contracts that we enter into, as a credit default by a reinsurer would have a similar impact to the failure of an institution with whom we had invested funds. Failure 23 by policyholders to pay policy premia on time is also a credit risk event. The Society takes on investment credit risk when it is considered beneficial to do so in support of the Society’s strategic objectives and in matching insurance liabilities. The Society seeks to minimise other forms of credit risk, in particular those related to reinsurance, deposit takers and bond issuers. Assets backing insurance liabilities are invested primarily in gilts and deposits. In addition, the Society has taken the following steps to mitigate credit risk: • Diversified the portfolio of investments to reduce the potential impact of a credit event; • Counterparty limits are in place for each cash deposit; • Only reinsurers who match the Society’s credit rating requirements are used. • C.2.2 Market Risk Market Risk is the risk of losses arising from changes in the value of assets or in the income from the assets. The key risks faced in this area are equity risk; interest rate risk; and exchange rate risk. The Society manages market risk so that the returns generated are in line with members’ expectations and support the Society’s future strategic and operational objectives. The Society’s Investment Committee oversees the investment policy and strategy, which the Society implements through the use of investment mandates. Each mandate aims to manage the market risk using some or all of the following mechanisms: • Defined performance benchmarks; • Limits on asset allocation by asset type, market capitalisation and geographical spread; • Limits on duration of the fixed interest portfolio. The Society is exposed to interest rate risk where changes in interest rates result in changes to market values or cash flows. Some members (Holloway) bear the interest rate risk through the allocation of bonuses which is influenced by changes in market values and cash flows.

C.2.3 Liquidity Risk Liquidity risk is the risk that the Society, although solvent, is unable to meet its obligations as they fall due. The Society’s objective on liquidity risk management is to ensure that sufficient funds are available over the short and medium term to meet the needs of the Society. This includes new business costs, planned strategic activities, member withdrawals, claims payments and day to day cash flow requirements. Liquidity risk is managed as follows: • Budgets are prepared to forecast the short term and medium term liquidity requirements; • Assets of suitable marketability and maturity are held to meet the member liabilities as they fall due; • Credit risk of deposit takers is managed by having appropriate counterparty and credit limits in place. As required under Article 295 of the Delegated Acts the total amount of the expected profit included in future premiums is as follows:

Expected profits included in future premiums: 31/12/2019 31/12/2018

£000 £000 Long Term Business Fund 118,026 100,687 General Business Fund 1,440 935 Total Expected profits included in future premiums (Society) 119,466 101,622 Health Cash Plan subsidiary 93 11 Total Expected profits included in future premiums (Group) 119,559 101,633

The expected profits included in future premiums (EPIFP) has increased in 2019. This is largely because of the expected future profits arising from new business in 2019, which was significantly higher than in 2018. Since the end of 2019, financial risk has been heavily influenced by the economic impact of COVID-19. From 31 December 2019 to 31 March 2020, the total return has been around (£6.0m). This has largely been driven by market risk. We do not anticipate any liquidity risk arising from COVID-19 as we hold sufficient assets in highly liquid short-term assets classes.

C.3 - Risk From Business Operations – “Operational Risks” Risks arising from business operations fall into four main categories, viz: 1. Conduct; 2. Broker Risk; 3. Operational; and 4. IT Systems 5. Cyber Security

Conduct risk chiefly relates to failure to ensure good customer outcomes in line with market and regulatory expectations. It also encompasses governance requirements including having a robust policy framework and remuneration policy. Broker Risk relates to risk of loss or lost opportunity from failing to adequately vet, monitor and manage broker relationships resulting in defaults in payments by intermediaries, inability to recover clawback (including fraud on premiums), unusual behaviour that is, for example, too heavily weighted to a specific industry sector, geographical location or other demographic. Any of which may result in the Society facing fraudulent applications and higher than expected claims experience, whether through collusion or otherwise Operational risk relates to direct or indirect loss arising from inadequate or failed internal processes, systems and/or people. IT Systems risk relates to direct or indirect losses arising from failure to specify, implement, manage and maintain appropriate ICT systems hardware, software and operating policies and procedures any of which could result in: significant loss of systems availability, loss of confidence from brokers, members, consumers and the media. Cyber Security risk relates to direct or indirect losses arising from failure to adequately protect our systems and data from external or internal threats, any of which could result in: significant loss of systems availability; loss of confidence from brokers, members, consumers and the media; plus, significant regulatory censure and fines.

Managing the risks is generally achieved by the application of robust policies and processes coupled with good governance. Operational risks are reported to Risk Management monthly in addition to being discussed by the Executive Board and encompassed within the quarterly risk report where necessary. Cyber risks are reported monthly via the Security Committee. The other risks are incorporated into quarterly risk dashboards and reports as appropriate. Operational risks are assessed on a fund by fund basis and then aggregated for the Society as a whole. The Board reviews the risk register composition on a regular basis and then monitors key risk indicators as part of its monthly performance management. The Board has set a risk appetite measured as a proportion of available capital for each of the funds. The utilisation of capital against this appetite is measured and considered regularly and appropriate action taken to address any issues. COVID-19 has allowed us to demonstrate our operational resilience. Within the space of one week, we were able to move to a position where 95% of our staff were working from home. Only key mail handling staff and facility management remain working from our offices as we adhere to the government’s requirement to stay at home. However, as a result of home working we have moderately increased exposure to other operational risks.

C.4 - Business Strategy & External Risks

Strategy risk relates to the failure to set or achieve a sustainable business strategy resulting in poor profit performance, ineffective capital utilisation, risk to solvency and/or negative publicity, it also encompasses expense management which is fundamental to any insurer’s survival. Virtually all business entities must continue to grow and innovate if they are to avoid stagnating and ultimately ceasing to exist. The Exeter is no different in this respect. Ensuring, however, that the correct strategy has been identified, implemented and continuously reviewed is one of the biggest risk challenges faced by any organisation, it is for this reason that strategy risk is invariably one of the largest risks faced.

Political Economic & Environmental Risk encompasses changes in Government policy, regulation, the economy and environmental impacts, e.g. the financial impact of climate change, but excludes items caught by Conduct Risk, i.e. Prudential Regulation.

Quantifying some of these risks can prove to be quite challenging, particularly when no precedent exists, e.g. COVID-19. Brexit and climate change.

C.5 - Risk Monitoring Each of the exposures to risk are analysed regularly to assess their likely impact and probability. The overall level of risk is then compiled into a detailed report taking into account the correlation of individual risks to arrive at a required level of capital. The Board is responsible for reviewing the risks faced by the Society and approving the required level of capital to be held against each risk element. Holdings in equities are by their nature subject to market movement. In order to mitigate this risk the Society employs an external investment portfolio manager and has a policy of only investing in equities out of assets not matching insurance liabilities. Assets required to back

26 insurance liabilities are therefore held in term deposits; index-linked securities; and fixed interest securities. The Society has a number of Private Medical Insurance policies overseas which present an exchange rate risk. This is mitigated by holding deposits in Euros as a natural hedge against the exchange rate risk. Exchange rate risk also arises from the Society’s overseas equity holdings and this risk is managed by limiting the extent of overseas exposure, holding diversified investments and not using such investments to back insurance liabilities.

C.6 - Sensitivities The Society explores the financial impact of risks through a series of sensitivities. Unlike the capital requirements under the main SCR calculation these are designed to relate to the business and are at no pre-determined risk level. They are designed to guide management in their decision-making and to look at key areas which may impact on results for the Society and for ECP. Our methodology groups risk into four areas: • Business risks and sensitivities – based on management decisions in areas such as sales, expense allocation, product design and reinsurance; • Economic risks and sensitivities – to explore those economic sensitivities that would have the greatest impact; • Insurance risks and sensitivities – to explore those areas of insurance risk which are likely to change and could have a significant impact, including the management actions that could be taken; and • Operational risks. Analysis is undertaken on both a quantitative and qualitative basis as required.

Section D : Valuation for Solvency Purposes

D.1 - Assets The Society values its assets using the following methodologies: • Intangible assets consist of bespoke computer software and software licences. For accounting purposes, intangible assets are initially recognised at cost and amortised using the straight line method over their useful lives (three to ten years). The amortisation periods used are reviewed annually. Software values are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Where the carrying amount is not recoverable the asset is written down immediately to the estimated recoverable amount, based on value in use calculations. Whilst these values are carried in the statutory accounts they are valued at nil for Solvency II purposes.

• Land and buildings are formally re-valued annually and included in the accounts at valuation with any surplus or deficit being transferred to a revaluation reserve.

• Fixed assets excluding property are valued at cost and depreciation is provided to write off the cost, less estimated residual value, of tangible assets by equal instalments over their estimated useful economic lives.

• The Society classifies its financial assets as financial assets at fair value through income or at amortised cost. • Financial assets at fair value through income The Society classifies all of its investments upon initial recognition as financial assets at fair value through income and subsequent valuation movements are recognised in the Statement of Comprehensive Income. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Society has transferred substantially all risks and rewards of ownership. Financial assets at fair value through income include listed and unlisted investments, and units in collective investment vehicles. Fair value is based on the bid value at the year end. • Financial assets at amortised cost The Society measures Term Deposits initially at fair value and then at amortised cost.

• Insurance receivables are recognised when due as at the reporting date.

• Cash and cash equivalents for statutory accounting purposes comprise cash at bank and in hand, and short term deposits with a maturity of less than 3 months. All such holdings are presented at current value with exchange rates being used where necessary. For Solvency II disclosure the Society only treats balances which are available immediately as cash and cash equivalents, with all other balances treated as investments.

• Reinsurance is recognised as a negative asset as the expected present value of all future cashflows under all reinsurance contracts, including reinsurance premiums and the reinsurer’s share of claims. The projections are calculated using best estimate assumptions and allow for discounting at the prescribed risk-free interest rates. More detail on the main assumptions is included below. D.1.1 - Intangible assets The Society initially recognises intangible assets on its balance sheet at cost and any values are then tested annually for impairment to estimate the asset’s recoverable amount. Whilst these assets are included for statutory accounts purposes the carrying amount is removed from the Solvency II balance sheet in accordance with the Regulations.

D.1.2 - Financial assets All financial assets are valued at fair value based upon the published bid value at the period end, apart from Term Deposits which are valued initially at fair value and then at amortised cost. The Society does not hold any unlisted securities or securities listed on inactive markets. Units in collective investment schemes are valued fair value. For Solvency II purposes accrued interest on fixed interest securities is included within the market valuation whereas for statutory accounting purposes it is treated as a separate receivable.

D.1.3 - Lease assets The Society does not have any finance leases.

D.1.4 - Holdings in related undertakings The acquisition of Engage Mutual Health Limited completed in late 2015, up until that point all subsidiaries were dormant and immaterial in aggregate. The acquisition of Engage Mutual Health Limited, now renamed The Exeter Cash Plan, was via a 100% share purchase to create a wholly owned subsidiary. The subsidiary adds approximately £3m to the Society’s revenue and has net assets of around £3m to support its regulatory capital requirement. The Exeter Cash Plan is a subsidiary of the General Fund. The subsidiary is treated as a strategic investment of the Society and is included in the General Fund. The subsidiary is consolidated into the General Fund in order to calculate the Society’s group balance sheet. Within the Society’s Statutory Accounts under IFRS the investment in related undertakings is valued at cost less impairment; the impairment review did not indicate a need to reduce the valuation. On a Solvency II basis the investment in related undertakings is valued at net assets.

D.1.5 - Deferred tax assets The Society does not recognise any deferred tax assets. Whilst tax losses do exist with subsidiary companies these are not expected to be realised as the vast majority of the Society’s operations fall outside of the scope of Corporation Tax.

D.2 - Technical provisions Under Solvency II, Technical Provisions comprise the Best Estimate Technical Provisions (BETPs) and the Risk Margin. The BETP is the expected present value of all future cashflows under the policy, including premiums, claims, expenses and commission, which occur after the valuation date. The projections are calculated using best estimate assumptions and allow for discounting at the prescribed risk-free interest rates. More detail on the main assumptions is included below. The Solvency II Technical Provisions require a ‘Risk Margin’ to be added to the BETPs to reflect the additional cost of capital needed to offset the risks inherent in the insurance. The valuation of pension and other post-retirement benefit obligations are determined using actuarial valuations. These involve making assumptions about interest rates, expected returns, longevity and future benefit indexation. Due to the long term nature of these obligations the estimates are subject to significant uncertainty. Details of the key pension assumptions are contained in Note 22 of the Report and Accounts as well as the key assumptions used in the calculation of the post-retirement medical benefits reserve. No transitional measures, matching adjustment or volatility adjustments have been applied to the calculation of the BETPs.

D.2.1 - Main assumptions within technical provisions

The main assumptions used to calculate technical provisions are set out below.

D.2.2 - Interest rates and inflation

The risk-free interest rate term structure used for discounting the projected cash flows in the technical calculation is the sterling relevant risk-free structure as specified by the Solvency II regulations. The Society used the rates as provided by European Insurance and Occupational Pensions Authority (“EIOPA”). The Society does not use the matching adjustment nor the volatility adjustment. The assumption for Retail Price Index (“RPI”) inflation is based on implied inflation from the Bank of England’s forward gilt yield curves, except for the short end which is based on the Bank of England’s inflation report.

D.2.3 - Expenses

The expenses incurred in servicing The Society’s policies consist of administration, claims management and new business expenses. The Society performs a regular expense analysis in order to allocate the expenses between initial and renewal and by type of expense. The best estimate expense assumptions are based on the results of this regular analysis together with budgeted expenses.

D.2.4 - Lapse assumptions

Lapse assumptions are set with reference to historic experience for The Society’s business, guidance from subject matter experts, reinsurers and industry data. Lapse assumptions vary by product, duration inforce and location.

D.2.5 - Claims Assumptions

Claims rate assumptions take account of relevant reinsurance and industry information and, where credible, internal experience including experience from The Society’s business. For long term business, the assumptions used for mortality, morbidity and longevity are based on standard industry tables (where available), adjusted where appropriate to reflect the Society’s own experience. Where the society lacks relevant experience, for example for its Managed Life and Real Life products, reinsurance rates will be used as a base to set assumptions. Due to the long term nature of these obligations, the estimates are subject to significant uncertainty. For Private Medical Insurance and Health Cash Plan policies within the general fund and The Exeter Cash Plan, estimates are made for the expected ultimate cost of claims reported as at the year- end date and the cost of claims incurred but not yet reported (IBNR). It can take many months before the ultimate cost of claims can be established with certainty, and the final outcome may be better or worse than provided. Standard actuarial claims projection techniques are used to estimate outstanding claims. These techniques use past patterns of delay between claims being incurred and settled and combine them with estimates of ultimate loss ratios and seasonality of claims. Case estimates are used for some reported claims where the ultimate amount is not known.

D.2.6 - Technical provision calculation methodology

Under Solvency II, Technical Provisions comprise the Best Estimate Technical Provisions (BETPs) and the Risk Margin.

The Society’s Best Estimate Technical Provisions are calculated using a gross premium valuation (as required by Solvency II) for all policies in-force and on risk at the valuation date. Therefore, the technical provisions are calculated based on the prospective value of future expected cashflows on a policy-by-policy basis, allowing for full premiums, claims, expenses and lapses. Negative reserves are permitted. The provisions are calculated net and gross of reinsurance to allow separate calculation of the reinsurance recoverables. The Risk Margin is calculated by projecting a future notional Solvency Capital Requirement (SCR), applying a cost of capital factor and discounting to provide a present value. The Society uses the Solvency II ‘Standard Formula’ to calculate its SCR. For the purposes of calculating the Risk Margin, Solvency II rules allow hedgeable risks to be ignored. The Society considers all Market risks (for example, investment risk and default risk) to be hedgeable and all other risks to be non-hedgeable.

D.2.7 - Uncertainty associated with the value of technical provisions Uncertainty relates primarily to how future actual experience will differ from the best estimate assumptions used to calculate the technical provisions. The key assumptions are interest rates, lapse rates, mortality rates, morbidity rates and future expenses. A robust assumption setting process is followed in order to ensure the uncertainty is well understood.

D.2.8 - Solvency II and IFRS valuation differences The financial statements are prepared utilising an accounting policy that mirrors as far as possible Solvency II principles for the Long Term Business Fund and uses IFRS for the General Business Fund. Note that none of the figures below have been adjusted for the impacts of COVID-19.

2019 2019 2019 2019 2019 2019 General General Long Long Cash Cash Fund Fund Term Term Plan Plan SII IFRS SII IFRS SII IFRS £’000 £’000 £’000 £’000 £’000 £’000

Investments 96,486 96,357 38,614 38,614 2,005 2,005

Future premium debtor - 11,285 - 1,630 936 Other debtors 4,361 3,235 2,646 2,901 622 622

Insurance Assets - - - 68,241 - -

Reinsurance Assets - - (39,586) - - - Intangible assets & deferred acquisition costs - 2,364 - 5,749 - 138 Other Assets 11,654 13,539 2,802 917 1,432 1,432 Total Assets 112,501 126,779 4,475 118,052 4,059 5,133

Technical Provisions 8,486 20,578 (91,269) - 265 1,298

Reinsurance Liabilities - - - 16,540 - - Other liabilities 4,131 6,016 6,099 6,099 755 755

Total Liabilities 12,617 26,594 (85,170) 22,639 1,020 2,054

Capital Resources (Own Funds) 99,883 100,185 89,645 95,413 3,039 3,079

Restated Restated 2018 2018 2018 2018 2018 2018 General General Long Long Cash Cash Fund Fund Term Term Plan Plan SII IFRS SII IFRS SII IFRS £’000 £’000 £’000 £’000 £’000 £’000

Investments 86,029 86,740 47,059 47,059 2,000 2,000 Future premium debtor 11,304 1,366 Other debtors 5,306 4,954 1,965 599 694 694

Insurance Assets - - - 62,381 - 871

Reinsurance Assets - - (41,474) - - - Intangible assets & deferred acquisition costs - 1,700 - 5,303 - 120 Other Assets 14,961 14,196 1,619 2,384 1,566 1,566

Total Assets 106,296 118,894 9,171 119,092 4,260 5,251

Technical Provisions 10,930 21,578 (81,942) - 401 1,271

Reinsurance Liabilities - 21,913 - - Other liabilities 4,075 4,075 4,102 4,867 779 779

Total Liabilities 15,005 25,653 (77,840) 26,780 1,180 2,050

Capital Resources (Own Funds) 91,291 93,242 87,010 92,313 3,080 3,201

2018 figures have been restated. This is due to two material errors in the preparation of the numbers • The risk margin calculation contained an incorrect allowance for the downside risk of income protection claims • The data underlying the persistency assumptions was found to contain errors

The Society also took the opportunity to incorporate an immaterial correction to the modelling of waiver of premium and to make improvements to the modelling of clawback on mass lapse in the restated 2018 numbers.

The effect of the restatement on the 2018 financial statements is detailed below.

Decrease in Insurance Assets 3,357 Decrease in Reinsurance Liabilities 4,066 Decrease in Capital Resources 709

The key differences between the methodologies are:

• the reclassification of assets and liabilities. • the removal of intangible assets and deferred acquisition costs (DAC). • presentation of the risk margin (which for IFRS purposes is presented gross rather than net). Technical provisions net of the premium debtor and DAC are similar on both bases as Long Term Reserves for IFRS purposes are now based on Solvency II principles, therefore the net own funds positions are similar on a Solvency II basis to IFRS. Group Own Funds (before ring-fenced fund adjustments) are £189.0m (2018 restated: £178.3m) on a Solvency II basis, compared with £195.9m (2018 restated: £185.6m) under IFRS.

D.3 - Other liabilities Certain Private Medical Insurance products sold by the Society include an age-at-entry policy whereby the Society calculates the policyholder’s premium by reference to the age of the policyholder on joining the Society rather than their age at each annual policy renewal, provided that their cover remains unchanged. The age-at-entry policies are annual, general insurance contracts and under the policy terms both the policyholder and the Society have the right not to renew the policy after the end of the 12-month term. Furthermore, management has discretion to alter premium rates and the level of cover under age-at-entry plans, subject to compliance with the overall age-at-entry principle. This product feature does not fall within the technical provisions prescribed by Solvency II and therefore does not affect the Solvency II balance sheet or SCR or Minimum Capital Requirement (“MCR”) calculations. However, the Board do take the impact of these policies into account when considering the long term management of the Society and when calculating the ORSA. It is management's current intention to continue to calculate premiums by reference to age-at- entry for these policies, acknowledging that this may result in future underwriting losses. As disclosed in the statutory accounts at 31st December 2019 for internal management (and ORSA) purposes £43.9 million (2018: £43.2 million) of the General Fund Capital Resources have been allocated to cover future underwriting losses arising from these age-at-entry polices. The Society does not guarantee this level of capital allocation and will be guided by the need to ensure its continued financial well-being and to meet statutory levels of solvency. The Society does not have any material leases. A small number of operating leases are in place for office equipment; the value of which is immaterial. The Society does not have any other provisions or contingent liabilities or deferred tax liabilities.

D.4 - Alternative methods for valuation The Society does not use any alternative methods for the valuation of liabilities.

D.5 - Employee benefits For some employees, the Society operates a funded pension scheme, which is now closed to future benefit accrual. The defined benefit scheme is operated from a trust, which has assets 34 which are held separately from the Society, and by trustees who ensure the scheme’s rules are strictly followed. The results of the formal valuation as at 1 January 2018 were updated to the accounting date by an independent qualified actuary in accordance with IAS 19. These are consistent between SII and IFRS valuation methods. The funding target is for the scheme to hold assets equal in value to the accrued benefits allowing for future pension revaluation and future pension increases. If there is a shortfall against this target, then the Society and trustees will agree on the deficit contributions to meet this deficit over a period. There is a risk to the Society that adverse experience could lead to a requirement for the Society to make additional contributions to recover any deficit that arises.

E : Capital Management

E.1 - Own funds (Society, ECP and Group) The following information relates to the own funds of the Society and its subsidiaries: • The Society holds own funds in Sterling and Euros, the Euros being used to cover trading operations within the EU. Subsidiaries’ own funds are all held in Sterling.

• The local currency for all reporting and regulatory returns is Sterling.

• The Exeter Cash Plan manages its capital in the same way as the main Society with a separate SCR and MCR calculation. The ORSA is combined with the rest of the Group to show the Cash Plan as a separate entity. See above for the monitoring process.

• Any intra-group transactions take place at market value with any resultant intra-group balances being settled regularly where necessary.

• All of the Society’s business falls within one of two separate ring-fenced funds: one for Long Term Business and one for short term General Business. There is no business conducted outside those funds and the Society manages its capital requirements separately for each fund. Ring-fenced fund restrictions mean that Own Funds at an overall Society level are restricted to the total SCR across both funds.

• The Exeter Cash Plan is a 100% subsidiary of the General Fund and its capital requirements are managed separately. On a group basis, ECP is consolidated into the General Fund. Share capital in ECP is classified as Tier 1 capital as directors have the right to cancel dividends at any time prior to payment.

• To calculate our group SCR, we have used accounting consolidation-based method

Section E.2 sets out the current own funds against SCR and MCR for the Society, ECP and the Group.

E.1.1 – Risk Appetite Exeter Friendly Society sets its risk appetite based on the results of its ORSA. This is to allow for the risks that the management of the company recognise that are not covered within the standard formula capital requirements on a Solvency II basis. The level of own funds is also monitored against the SCR requirement but the ORSA requirement is the key indicator for the Board. As the LTBF and GBF are separate funds with no ability for cross-subsidy then the appetite will apply separately for each fund. The appetite is set out in terms of excess of free assets over the ORSA Capital Requirement and is measured by quoting the free assets over the requirement as a percentage of the capital requirement. Limits are set at agreed points for intervention and solvency is then monitored on a monthly basis.

E.1.2 - Restrictions on use of capital In the case of Exeter Friendly Society all funds result from accumulated mutual capital with no capital tiers or capital instruments in issue; subordinated or unsubordinated. Therefore, all surplus capital is available to support the business. The Society owns shares within the subsidiary companies which are fully paid up with no other forms of financing available.

E.1.3 – Difference between Own Funds and IFRS equity There are a number of differences between Own Funds under the Solvency II definitions and those under IFRS. Please refer to Section D.2.8 above.

E.1.4 - Treatment of intra-group transactions Any intra-group transactions are treated at arms-length and each sub fund or entity is therefore considered on a standalone basis. Any expenses that are shared are reviewed regularly to ensure that the allocations are an appropriate reflection of the resources utilised by each fund or entity.

E.2 – SCR and MCR

E.2.1 - MCR Calculations The Society uses the standard formula for the MCR as set out in the Solvency II regulations. The Society has not applied any undertaking-specific parameters, capital add-ons or simplifications. 2019 2018 Minimum Capital Requirement: £m £m Society 20.6 18.9 Cash plan subsidiary 2.2 2.2 Group 22.8 21.1

For the Cash Plan subsidiary, the Absolute Floor of €2.5m applies, meaning that its MCR exceeds the SCR as shown in section E2.3 below. The appended table (S.28.01.01) sets out the information on the input used by the Society to calculate the MCR.

E.2.2 – SCR calculation on a Pillar 1 basis The SCR by component of the standard formula at 31st December 2019 is as follows:

2019 2018 Society Society Group Long Group Long Term General Cash General Cash £m Term £m Fund Fund Plan Fund Plan Fund £m £m £m £m £m £m Interest 8.1 6.3 0.0 14.4 7.7 6.1 0.0 13.8

Equity 7.5 12.6 0.0 20.1 7.9 8.9 0.0 16.8

Property - 0.6 0.0 0.6 - 0.6 0.0 0.6

Spread 1.5 2.5 0.0 4.0 2.5 2.3 0.0 4.8

Concentration 0.5 0.0 0.0 0.6 0.3 1.0 0.0 1.2

Currency 1.2 2.6 0.0 3.7 1.1 2.0 0.0 3.1

MARKET 12.3 17.3 0.0 29.7 13.0 13.5 0.0 26.6

DEFAULT 1.3 0.7 0.2 2.2 0.4 0.8 0.2 1.4

Morbidity 28.0 - - 28.0 25.6 - - 25.6

Mortality 0.3 - - 0.3 0.2 - - 0.2

Expense 6.7 - - 6.7 6.5 - - 6.5

Non SLT Health - 6.0 0.6 6.5 - 6.1 0.6 6.7 premium & reserve

Lapse 41.7 0.6 0.0 42.3 39.6 0.4 0.0 40.0

Health Catastrophe Risk 0.3 0.2 0.0 0.5 0.4 0.3 0.0 0.7

HEALTH 55.2 6.0 0.6 61.8 52.0 6.2 0.6 58.7

LIFE 1.8 - - 1.8 1.2 - - 1.2

OPERATIONAL 1.1 1.1 0.1 2.3 0.9 1.2 0.1 2.2

Total Category -10.2 -4.1 -0.1 -15.2 -9.4 -4.0 -0.1 -14.4 Diversification

SCR 61.5 21.1 0.7 82.6 58.1 17.6 0.8 75.7

The combined SCR for the Society is £82.6m (2018 : £75.7m), being the sum of the SCRs for each of the two sub-funds.

Diversification arises between risks within the categories of Market risk and Health risk and between the categories of Market, Default, Health and Operational risk. The main diversification benefits are between Lapse and Morbidity risk in the LTBF and between Health and Market risk in the GBF.

E.2.3 - Current own funds position against SCR The Board’s key performance indicator in this area is the level of own funds over and above the capital requirement expressed as a percentage of the capital requirement. The Pillar 1 (SCR) solvency positions of each fund of the Society, the Society as a whole, the cash plan subsidiary and the Group, as at 31 December 2018, are shown below.

2019 2018 Society Cash Group Society Cash Group £m Long General Plan Long General Plan Term Fund Term Fund Reinsurance recoverables (39.6) - - (39.6) (44.8) - - (45.7)

Investments, cash & other assets 44.1 114.4 4.1 158.4 50.6 107.3 4.3 158.0

TOTAL ASSETS 4.5 114.4 4.1 118.9 5.8 107.3 4.3 112.2 Best Estimate Liabilities (131.7) 7.8 0.2 (123.8) (124.6) 9.7 0.4 (117.8)

Risk Margin 31.9 0.7 0.1 32.6 30.3 0.7 0.1 30.8

Other Liabilities 16.4 6.0 0.8 22.5 11.7 5.1 0.8 16.7

TOTAL LIABILITIES (83.3) 14.5 1.0 (68.8) (82.6) 15.5 1.2 (70.3) TOTAL AVAILABLE OWN FUNDS (before RFF 87.8 99.9 3.0 187.7 88.4 91.8 3.1 182.5 restrictions)

SCR 61.5 21.1 0.8 82.6 58.1 17.6 0.8 75.3

OWN FUNDS ABOVE SCR 26.3 78.8 2.3 107.4 30.4 74.2 2.3 109.5

PERCENTAGE COVER OF SCR 143% 474% 391% 227% 152% 520% 390% 242%

AVAILABLE OWN FUNDS after RFF 82.6 3.0 85.6 75.7 3.1 78.4 restriction*

OWN FUNDS ABOVE SCR after 0.0 2.3 0.0 0.0 2.3 0.0 RFF restriction*

PERCENTAGE COVER OF SCR after RFF 0% 391% 0% 0% 390% 0% restriction*

MCR 19.8 2.2 21.9 18.9 2.2 21.0

PERCENTAGE COVER OF MCR 417% 141% 390% 400% 139% 372%

* As explained in Section E.1, all the Society’s business falls within one of the two ring-fenced funds with no business being conducted outside those funds. Therefore, ring-fenced fund restrictions mean that Own Funds at an overall Society and Group level are restricted to the total SCR across both funds, giving rise to the results above showing zero excess Own Funds. The more meaningful results are those at fund level and before the ring-fenced fund restrictions.

The extent of the cover and the movement over time is a factor of how these funds are projected to grow over time. • Long term products incur a high proportion of initial costs which means that due to the level of expansion that is envisaged the level of solvency cover decreases over time. This could be countered by reducing new business or accessing alternative reinsurance funding arrangements.

• The General Business Fund has lower growth funding requirements and is not expected to grow as fast as the long term fund hence the reduction in cover is more gradual.

• The Cash Plan requires capital to grow as the product margins are modest and new business has certain acquisition costs. Therefore, it may require some capital injection from the General Fund over time but that Fund has sufficient capital to finance this. Expected impact of COVID-19 Based on the information to 31 March 2020, we estimate that the impact of COVID-19 will be • To reduce Percentage Cover of the SCR in the Long Term Fund by around 5% of SCR • To reduce Percentage Cover of the SCR in the General Fund by around 16% of SCR • To have no impact on Percentage Cover of the SCR in the Cash Plan In arriving at this conclusion, we have had to make a number of assumptions. The most material of these are • There are no further movements in asset values or interest rates after 31 March 2020 • COVID-19 follows a similar path to other countries, with the peak period lasting around 3 months and with a death rate of 0.07% of the population. This would equate to around 45,000 deaths in the UK Given the relatively early stage in the evolution of COVID-19, these estimates are subject to considerable uncertainty.

E.2.4 – Overall own funds position against SCR As noted above, the Society operates entirely through two separate sub-funds, the General and Long Term Funds, with The Exeter Cash Plan as the single operating subsidiary of the General Fund. In accordance with the Solvency II regulations each sub-fund is treated as ring fenced from a capital point of view and a surplus from one fund cannot be added to another. As a result of this at the overall Society and Group level any excess of own funds within each of the Sub-funds cannot be reported as an overall surplus and therefore the Society is in the position of having to report own funds at overall Society and Group level equal to the SCR with no free assets. This is not an operational problem as no insurance business is undertaken outside of the two sub-funds but does present a reporting anomaly.

E.2.5 - Stress Testing Of Capital Requirements As part of the ORSA process the Board considers stress test scenarios which look at potential movements on parameters such as: • new business levels; • lapse rates; • claim rates; and • interest rates. The outcomes of these tests are then considered before and after potential management actions which could then be taken to rectify any capital issues to arrive at a net position. These tests did not reveal areas of concern for the Board.

E.3 - Use of duration-based equity models

The Society does not use these models.

E.4 - Differences between the standard formula and any internal models used The Society only applies the Standard Formula approach.

E.5 - Non Compliance with SCR or MCR There has been no non-compliance with SCR or MCR for the Society or its subsidiaries. See section E.2 above

Appendix I – List of submission data

Note that none of these have been adjusted to reflect the impacts of COVID-19. Society S.02.01.02 Balance sheet (audited) S.05.01.02 Premiums, claims and expenses by line of business (non-life) (unaudited) S.05.01.02 Premiums, claims and expenses by line of business (life) (unaudited) S.05.02.01 Premiums, claims and expenses by country (non-life) (unaudited) S.05.02.01 Premiums, claims and expenses by country (life) (unaudited) S.12.01.02 Life and Health SLT Technical Provisions (audited) S.17.01.02 Non-Life Technical Provisions (audited) S.19.01.21 Non-Life insurance claims - Accident Year (unaudited) S.23.01.01 Own Funds (audited) S.25.01.21 Solvency Capital Requirement - for undertakings on Standard Formula (audited) S.28.02.01 Minimum Capital Requirement - Both life and non-life insurance activity (audited)

Cash Plan S.02.01.02 Balance sheet (audited) S.05.02.01 Premiums, claims and expenses by line of business (non-life) (unaudited) S05.01.02 Premiums, claims and expenses by country (non-life) (unaudited) S.17.01.02 Non-Life Technical Provisions (audited) S.19.02.21 Non-Life insurance claims - Accident Year (unaudited) S.23.01.01 Own Funds (audited) S25.01.21 Solvency Capital Requirement - for undertakings on Standard Formula (audited) S28.01.01 Minimum Capital Requirement - Only life or only non-life insurance or reinsurance activity (audited)

Group S02.01.02 Balance sheet (audited) S.05.01.02 Premiums, claims and expenses by line of business (non-life) (unaudited) S.05.01.02 Premiums, claims and expenses by line of business (life) (unaudited) S.05.02.01 Premiums, claims and expenses by country (non-life) (unaudited) S.05.02.01 Premiums, claims and expenses by country (life) (unaudited) S23.01.22 Own Funds (audited) S25.01.22 Solvency Capital Requirement - for groups on Standard Formula (audited) S32.01.22 Undertakings in the scope of the group (audited)

Exeter Friendly Society Limited

Solvency and Financial Condition Report

Disclosures

31 December 2019

(Monetary amounts in GBP thousands) General information

Undertaking name Exeter Friendly Society Limited Undertaking identification code 213800V19RLONY7XIL94 Type of code of undertaking LEI Type of undertaking Undertakings pursuing both life and non-life insurance activity - article 73 (5) Country of authorisation GB Language of reporting en Reporting reference date 31 December 2019 Currency used for reporting GBP Accounting standards IFRS Method of Calculation of the SCR Standard formula Matching adjustment No use of matching adjustment Volatility adjustment No use of volatility adjustment Transitional measure on the risk-free interest rate No use of transitional measure on the risk-free interest rate Transitional measure on technical provisions No use of transitional measure on technical provisions

List of reported templates S.02.01.02 - Balance sheet S.05.01.02 - Premiums, claims and expenses by line of business S.05.01.02 - Premiums, claims and expenses by line of business S.05.02.01 - Premiums, claims and expenses by country S.05.02.01 - Premiums, claims and expenses by country S.12.01.02 - Life and Health SLT Technical Provisions S.17.01.02 - Non-Life Technical Provisions S.19.01.21 - Non-Life insurance claims S.23.01.01 - Own Funds S.25.01.21 - Solvency Capital Requirement - for undertakings on Standard Formula S.28.02.01 - Minimum Capital Requirement - Both life and non-life insurance activity S.02.01.02 Balance sheet Solvency II value Assets C0010 R0030 Intangible assets 0 R0040 Deferred tax assets 0 R0050 Pension benefit surplus 974 R0060 Property, plant & equipment held for own use 3,213 R0070 Investments (other than assets held for index-linked and unit-linked contracts) 135,100 R0080 Property (other than for own use) 0 R0090 Holdings in related undertakings, including participations 80 R0100 Equities 0 R0110 Equities - listed 0 R0120 Equities - unlisted 0 R0130 Bonds 45,779 R0140 Government Bonds 45,779 R0150 Corporate Bonds 0 R0160 Structured notes 0 R0170 Collateralised securities 0 R0180 Collective Investments Undertakings 89,241 R0190 Derivatives 0 R0200 Deposits other than cash equivalents 0 R0210 Other investments 0 R0220 Assets held for index-linked and unit-linked contracts 0 R0230 Loans and mortgages 0 R0240 Loans on policies 0 R0250 Loans and mortgages to individuals 0 R0260 Other loans and mortgages 0 R0270 Reinsurance recoverables from: -39,586 R0280 Non-life and health similar to non-life 0 R0290 Non-life excluding health 0 R0300 Health similar to non-life 0 R0310 Life and health similar to life, excluding index-linked and unit-linked -39,586 R0320 Health similar to life -39,921 R0330 Life excluding health and index-linked and unit-linked 335 R0340 Life index-linked and unit-linked 0 R0350 Deposits to cedants 0 R0360 Insurance and intermediaries receivables 2,829 R0370 Reinsurance receivables 834 R0380 Receivables (trade, not insurance) 3,343 R0390 Own shares (held directly) 0

R0400 Amounts due in respect of own fund items or initial fund called up but not yet paid in 0

R0410 Cash and cash equivalents 10,269 R0420 Any other assets, not elsewhere shown R0500 Total assets 116,976 S.02.01.02 Balance sheet

Solvency II value Liabilities C0010 R0510 Technical provisions - non-life 8,486 R0520 Technical provisions - non-life (excluding health) 0 R0530 TP calculated as a whole 0 R0540 Best Estimate 0 R0550 Risk margin 0 R0560 Technical provisions - health (similar to non-life) 8,486 R0570 TP calculated as a whole 0 R0580 Best Estimate 7,826 R0590 Risk margin 660 R0600 Technical provisions - life (excluding index-linked and unit-linked) -91,269 R0610 Technical provisions - health (similar to life) -91,600 R0620 TP calculated as a whole 0 R0630 Best Estimate -122,522 R0640 Risk margin 30,922 R0650 Technical provisions - life (excluding health and index-linked and unit-linked) 331 R0660 TP calculated as a whole 0 R0670 Best Estimate -677 R0680 Risk margin 1,008 R0690 Technical provisions - index-linked and unit-linked 0 R0700 TP calculated as a whole 0 R0710 Best Estimate 0 R0720 Risk margin 0 R0740 Contingent liabilities 0 R0750 Provisions other than technical provisions 0 R0760 Pension benefit obligations 140 R0770 Deposits from reinsurers 0 R0780 Deferred tax liabilities 0 R0790 Derivatives 0 R0800 Debts owed to credit institutions 0 R0810 Financial liabilities other than debts owed to credit institutions 0 R0820 Insurance & intermediaries payables 1,725 R0830 Reinsurance payables 962 R0840 Payables (trade, not insurance) 7,403 R0850 Subordinated liabilities 0 R0860 Subordinated liabilities not in BOF 0 R0870 Subordinated liabilities in BOF 0 R0880 Any other liabilities, not elsewhere shown 0 R0900 Total liabilities -72,553

R1000 Excess of assets over liabilities 189,529 S.05.01.02 Premiums, claims and expenses by line of business

Non-life

Line of business for: accepted non-proportional Line of Business for: non-life insurance and reinsurance obligations (direct business and accepted proportional reinsurance) reinsurance

Marine, Fire and Total Medical Income Workers' Motor vehicle General Credit and Legal Marine, Other motor aviation and other damage Misc. financial expense protection compensation liability liability suretyship expenses Assistance Health Casualty aviation and Property insurance transport to property loss insurance insurance insurance insurance insurance insurance insurance transport insurance insurance

C0010 C0020 C0030 C0040 C0050 C0060 C0070 C0080 C0090 C0100 C0110 C0120 C0130 C0140 C0150 C0160 C0200 Premiums written R0110 Gross - Direct Business 36,969 36,969 R0120 Gross - Proportional reinsurance accepted 0 R0130 Gross - Non-proportional reinsurance accepted 0 R0140 Reinsurers' share 0 R0200 Net 36,969 36,969 Premiums earned R0210 Gross - Direct Business 37,478 37,478 R0220 Gross - Proportional reinsurance accepted 0 R0230 Gross - Non-proportional reinsurance accepted 0 R0240 Reinsurers' share 0 R0300 Net 37,478 37,478 Claims incurred R0310 Gross - Direct Business 27,091 27,091 R0320 Gross - Proportional reinsurance accepted 0 R0330 Gross - Non-proportional reinsurance accepted 0 R0340 Reinsurers' share 0 R0400 Net 27,091 27,091 Changes in other technical provisions R0410 Gross - Direct Business 90 90 R0420 Gross - Proportional reinsurance accepted 0 R0430 Gross - Non-proportional reinsurance accepted 0 R0440 Reinsurers' share 0 R0500 Net 90 90

R0550 Expenses incurred 9,304 9,304 R1200 Other expenses 2,102 R1300 Total expenses 11,406 S.05.01.02 Premiums, claims and expenses by line of business

Life

Line of Business for: life insurance obligations Life reinsurance obligations

Annuities stemming from Annuities non-life insurance stemming from Index-linked contracts and Insurance with non-life insurance Health and unit- Other life relating to Health Life Total profit contracts and insurance linked insurance insurance reinsurance reinsurance participation relating to health insurance obligations other insurance than health obligations insurance obligations

C0210 C0220 C0230 C0240 C0250 C0260 C0270 C0280 C0300 Premiums written R1410 Gross 26,849 26,849 R1420 Reinsurers' share 8,028 8,028 R1500 Net 18,821 0 18,821 Premiums earned R1510 Gross 26,849 26,849 R1520 Reinsurers' share 8,028 8,028 R1600 Net 18,821 0 18,821 Claims incurred R1610 Gross 8,376 8,376 R1620 Reinsurers' share 3,718 3,718 R1700 Net 4,659 0 4,659 Changes in other technical provisions R1710 Gross 0 0 R1720 Reinsurers' share 0 R1800 Net 0 0 0 R1900 Expenses incurred 24,218 0 24,218 R2500 Other expenses 1,943 R2600 Total expenses 26,161 S.05.02.01 Premiums, claims and expenses by country

Non-life

C0010 C0020 C0030 C0040 C0050 C0060 C0070 Top 5 countries (by amount of gross Top 5 countries (by amount of gross premiums written) - premiums written) - non-life non-life obligations Total Top 5 and Home Country obligations home country R0010 ES PT GR CY MT

C0080 C0090 C0100 C0110 C0120 C0130 C0140 Premiums written R0110 Gross - Direct Business 33,474 648 494 270 258 94 35,238 R0120 Gross - Proportional reinsurance accepted 0 R0130 Gross - Non-proportional reinsurance accepted 0 R0140 Reinsurers' share 0 R0200 Net 33,474 648 494 270 258 94 35,238 Premiums earned R0210 Gross - Direct Business 33,934 657 501 274 261 95 35,722 R0220 Gross - Proportional reinsurance accepted 0 R0230 Gross - Non-proportional reinsurance accepted 0 R0240 Reinsurers' share 0 R0300 Net 33,934 657 501 274 261 95 35,722 Claims incurred R0310 Gross - Direct Business 24,529 475 362 198 189 69 25,822 R0320 Gross - Proportional reinsurance accepted 0 R0330 Gross - Non-proportional reinsurance accepted 0 R0340 Reinsurers' share 0 R0400 Net 24,529 475 362 198 189 69 25,822 Changes in other technical provisions R0410 Gross - Direct Business 81 2 1 1 1 0 86 R0420 Gross - Proportional reinsurance accepted 0 R0430 Gross - Non-proportional reinsurance accepted 0 R0440 Reinsurers' share 0 R0500 Net 81 2 1 1 1 0 86

R0550 Expenses incurred 7,073 137 104 57 54 20 7,446 R1200 Other expenses 2,102 R1300 Total expenses 9,548 S.05.02.01 Premiums, claims and expenses by country

Life

C0150 C0160 C0170 C0180 C0190 C0200 C0210 Top 5 countries (by amount of gross premiums written) - life Top 5 countries (by amount of gross obligations premiums written) - life obligations Total Top 5 and Home Country home country R1400

C0220 C0230 C0240 C0250 C0260 C0270 C0280 Premiums written R1410 Gross 26,849 26,849 R1420 Reinsurers' share 8,028 8,028 R1500 Net 18,821 18,821 Premiums earned R1510 Gross 26,849 26,849 R1520 Reinsurers' share 8,028 8,028 R1600 Net 18,821 18,821 Claims incurred R1610 Gross 8,376 8,376 R1620 Reinsurers' share 3,718 3,718 R1700 Net 4,659 4,659 Changes in other technical provisions R1710 Gross 0 R1720 Reinsurers' share 0 R1800 Net 0 0

R1900 Expenses incurred 24,218 24,218 R2500 Other expenses 1,943 R2600 Total expenses 26,161 S.12.01.02 Life and Health SLT Technical Provisions

Index-linked and unit-linked insurance Other life insurance Annuities Health insurance (direct business) stemming from Annuities non-life stemming from Total insurance non-life (Life other Health Insurance contracts and insurance Total (Health Accepted than health reinsurance with profit Contracts Contracts relating to Contracts Contracts contracts and similar to life Contracts Contracts reinsurance insurance, (reinsurance participation without without insurance without with options relating to insurance) with options with options including accepted) options and options and obligation other options and or health or guarantees or guarantees Unit-Linked) guarantees guarantees than health guarantees guarantees insurance insurance obligations obligations

C0020 C0030 C0040 C0050 C0060 C0070 C0080 C0090 C0100 C0150 C0160 C0170 C0180 C0190 C0200 C0210 R0010 Technical provisions calculated as a whole 0 0 0 0 Total Recoverables from reinsurance/SPV and Finite Re after the adjustment for expected losses due to counterparty default R0020 associated to TP calculated as a whole 0 0 0 0

Technical provisions calculated as a sum of BE and RM

Best estimate R0030 Gross Best Estimate 7,806 -8,483 -677 -45,627 -76,896 -122,522

Total Recoverables from reinsurance/SPV and Finite Re after R0080 the adjustment for expected losses due to counterparty default 0 335 335 -17,386 -22,535 -39,921

Best estimate minus recoverables from reinsurance/SPV R0090 7,806 0 -8,818 -1,012 -28,241 -54,360 -82,601 and Finite Re

R0100 Risk margin 0 1,008 1,008 30,922 30,922

Amount of the transitional on Technical Provisions R0110 Technical Provisions calculated as a whole 0 0 0 0 R0120 Best estimate 0 0 0 0 0 R0130 Risk margin 0 0 0 0

R0200 Technical provisions - total 7,806 -7,475 331 -91,600 -91,600 S.17.01.02 Non-Life Technical Provisions

Direct business and accepted proportional reinsurance Accepted non-proportional reinsurance

Non- Marine, Fire and other Non- Non- proportional Non- Total Non-Life Medical Income Workers' Motor vehicle General Credit and Other motor aviation and damage to Legal expenses Miscellaneous proportional proportional marine, proportional obligation expense protection compensation liability liability suretyship Assistance insurance transport property insurance financial loss health casualty aviation and property insurance insurance insurance insurance insurance insurance insurance insurance reinsurance reinsurance transport reinsurance reinsurance

C0020 C0030 C0040 C0050 C0060 C0070 C0080 C0090 C0100 C0110 C0120 C0130 C0140 C0150 C0160 C0170 C0180 R0010 Technical provisions calculated as a whole 0 0

Total Recoverables from reinsurance/SPV and Finite Re after R0050 the adjustment for expected losses due to counterparty default 0 associated to TP calculated as a whole

Technical provisions calculated as a sum of BE and RM Best estimate Premium provisions R0060 Gross 4,159 4,159 Total recoverable from reinsurance/SPV and Finite Re R0140 after the adjustment for expected losses due to 0 counterparty default R0150 Net Best Estimate of Premium Provisions 4,159 4,159

Claims provisions R0160 Gross 3,667 3,667 Total recoverable from reinsurance/SPV and Finite Re R0240 after the adjustment for expected losses due to 0 counterparty default R0250 Net Best Estimate of Claims Provisions 3,667 3,667

R0260 Total best estimate - gross 7,826 7,826 R0270 Total best estimate - net 7,826 7,826

R0280 Risk margin 660 660

Amount of the transitional on Technical Provisions R0290 Technical Provisions calculated as a whole 0 R0300 Best estimate 0 R0310 Risk margin 0

R0320 Technical provisions - total 8,486 8,486 Recoverable from reinsurance contract/SPV and R0330 Finite Re after the adjustment for expected losses due to 0 0 counterparty default - total Technical provisions minus recoverables from R0340 8,486 8,486 reinsurance/SPV and Finite Re - total S.19.01.21 Non-Life insurance claims

Total Non-life business

Z0020 Accident year / underwriting year Accident Year

Gross Claims Paid (non-cumulative) (absolute amount)

C0010 C0020 C0030 C0040 C0050 C0060 C0070 C0080 C0090 C0100 C0110 C0170 C0180 Year Development year In Current Sum of years 0 1 2 3 4 5 6 7 8 9 10 & + year (cumulative) R0100 Prior 0 0 0 R0160 2010 0 0 0 0 0 0 0 0 0 0 0 0 R0170 2011 0 0 0 0 0 0 0 0 0 0 0 R0180 2012 0 0 0 0 0 0 0 0 0 0 R0190 2013 0 0 0 0 0 0 0 0 0 R0200 2014 0 0 0 0 0 0 0 0 R0210 2015 0 4,440 0 0 0 0 4,440 R0220 2016 30,394 6,206 0 0 0 36,600 R0230 2017 27,441 3,723 0 0 31,163 R0240 2018 25,015 3,632 3,632 28,647 R0250 2019 23,549 23,549 23,549 R0260 Total 27,181 124,399

Gross Undiscounted Best Estimate Claims Provisions (absolute amount) C0360 C0200 C0210 C0220 C0230 C0240 C0250 C0260 C0270 C0280 C0290 C0300 Year end Year Development year (discounted 0 1 2 3 4 5 6 7 8 9 10 & + data) R0100 Prior 0 0 R0160 2010 0 0 0 0 0 0 0 0 0 0 0 R0170 2011 0 0 0 0 0 0 0 0 0 0 R0180 2012 0 0 0 0 0 0 0 0 0 R0190 2013 0 0 0 0 0 0 0 0 R0200 2014 0 0 0 0 0 0 0 R0210 2015 0 0 0 0 0 0 R0220 2016 0 0 0 0 0 R0230 2017 0 0 0 0 R0240 2018 0 0 0 R0250 2019 3,669 3,669 R0260 Total 3,669 S.23.01.01 Own Funds

Tier 1 Tier 1 Basic own funds before deduction for participations in other financial sector as foreseen in article 68 of Delegated Regulation 2015/35 Total Tier 2 Tier 3 unrestricted restricted C0010 C0020 C0030 C0040 C0050 R0010 Ordinary share capital (gross of own shares) 0 0 0 R0030 Share premium account related to ordinary share capital 0 0 0 R0040 Initial funds, members' contributions or the equivalent basic own-fund item for mutual and mutual-type undertakings 0 0 0 R0050 Subordinated mutual member accounts 0 0 0 0 R0070 Surplus funds 189,529 189,529 R0090 Preference shares 0 0 0 0 R0110 Share premium account related to preference shares 0 0 0 0 R0130 Reconciliation reserve -106,939 -106,939 R0140 Subordinated liabilities 0 0 0 0 R0160 An amount equal to the value of net deferred tax assets 0 0 R0180 Other own fund items approved by the supervisory authority as basic own funds not specified above 0 0 0 0 0

R0220 Own funds from the financial statements that should not be represented by the reconciliation reserve and do not meet the criteria to be classified as Solvency II own funds 0

R0230 Deductions for participations in financial and credit institutions 0

R0290 Total basic own funds after deductions 82,590 82,590 0 0 0

Ancillary own funds R0300 Unpaid and uncalled ordinary share capital callable on demand 0 R0310 Unpaid and uncalled initial funds, members' contributions or the equivalent basic own fund item for mutual and mutual - type undertakings, callable on demand 0 R0320 Unpaid and uncalled preference shares callable on demand 0 R0330 A legally binding commitment to subscribe and pay for subordinated liabilities on demand 0 R0340 Letters of credit and guarantees under Article 96(2) of the Directive 2009/138/EC 0 R0350 Letters of credit and guarantees other than under Article 96(2) of the Directive 2009/138/EC 0 R0360 Supplementary members calls under first subparagraph of Article 96(3) of the Directive 2009/138/EC 0 R0370 Supplementary members calls - other than under first subparagraph of Article 96(3) of the Directive 2009/138/EC 0 R0390 Other ancillary own funds 0 R0400 Total ancillary own funds 0 0 0

Available and eligible own funds R0500 Total available own funds to meet the SCR 82,590 82,590 0 0 0 R0510 Total available own funds to meet the MCR 82,590 82,590 0 0 R0540 Total eligible own funds to meet the SCR 82,590 82,590 0 0 0 R0550 Total eligible own funds to meet the MCR 82,590 82,590 0 0

R0580 SCR 82,785 R0600 MCR 20,696 R0620 Ratio of Eligible own funds to SCR 99.76% R0640 Ratio of Eligible own funds to MCR 399.05%

Reconcilliation reserve C0060 R0700 Excess of assets over liabilities 189,529 R0710 Own shares (held directly and indirectly) 0 R0720 Foreseeable dividends, distributions and charges R0730 Other basic own fund items 189,529 R0740 Adjustment for restricted own fund items in respect of matching adjustment portfolios and ring fenced funds 106,939 R0760 Reconciliation reserve -106,939

Expected profits R0770 Expected profits included in future premiums (EPIFP) - Life business 118,026 R0780 Expected profits included in future premiums (EPIFP) - Non- life business 1,440 R0790 Total Expected profits included in future premiums (EPIFP) 119,466 S.25.01.21 Solvency Capital Requirement - for undertakings on Standard Formula

Gross solvency USP Simplifications capital requirement

C0110 C0090 C0120 R0010 Market risk 31,503 R0020 Counterparty default risk 2,156 R0030 Life underwriting risk 1,913 R0040 Health underwriting risk 68,879 R0050 Non-life underwriting risk 0 R0060 Diversification -20,569 USP Key

R0070 Intangible asset risk 0 For life underwriting risk: 1 - Increase in the amount of annuity benefits R0100 Basic Solvency Capital Requirement 83,883 9 - None

For health underwriting risk: Calculation of Solvency Capital Requirement C0100 1 - Increase in the amount of annuity R0130 Operational risk 2,198 benefits 2 - Standard deviation for NSLT health R0140 Loss-absorbing capacity of technical provisions -3,296 premium risk R0150 Loss-absorbing capacity of deferred taxes 0 3 - Standard deviation for NSLT health gross premium risk R0160 Capital requirement for business operated in accordance with Art. 4 of Directive 2003/41/EC 0 4 - Adjustment factor for non-proportional R0200 Solvency Capital Requirement excluding capital add-on 82,785 reinsurance 5 - Standard deviation for NSLT health R0210 Capital add-ons already set 0 reserve risk R0220 Solvency capital requirement 82,785 9 - None

For non-life underwriting risk: Other information on SCR 4 - Adjustment factor for non-proportional reinsurance R0400 Capital requirement for duration-based equity risk sub-module 0 6 - Standard deviation for non-life premium risk R0410 Total amount of Notional Solvency Capital Requirements for remaining part 0 7 - Standard deviation for non-life gross R0420 Total amount of Notional Solvency Capital Requirements for ring fenced funds 82,590 premium risk 8 - Standard deviation for non-life R0430 Total amount of Notional Solvency Capital Requirements for matching adjustment portfolios 0 reserve risk R0440 Diversification effects due to RFF nSCR aggregation for article 304 0 9 - None

Approach to tax rate C0109 R0590 Approach based on average tax rate Not applicable

LAC DT Calculation of loss absorbing capacity of deferred taxes C0130 R0640 LAC DT 0 R0650 LAC DT justified by reversion of deferred tax liabilities 0 R0660 LAC DT justified by reference to probable future taxable economic profit 0 R0670 LAC DT justified by carry back, current year 0 R0680 LAC DT justified by carry back, future years 0 R0690 Maximum LAC DT 0 S.28.02.01

Minimum Capital Requirement - Both life and non-life insurance activity

Non-life activitiesLife activities Non-life activities Life activities

MCR(NL,NL) Result MCR(NL,L) Result

C0010 C0020 Linear formula component for non-life insurance and R0010 2,105 0 reinsurance obligations

Net (of Net (of Net (of Net (of reinsurance/S reinsurance) reinsurance/S reinsurance) PV) best written PV) best written estimate and premiums in estimate and premiums in TP calculated the last 12 TP calculated the last 12 as a whole months as a whole months

C0030 C0040 C0050 C0060 R0020 Medical expense insurance and proportional reinsurance 7,826 36,969 R0030 Income protection insurance and proportional reinsurance R0040 Workers' compensation insurance and proportional reinsurance R0050 Motor vehicle liability insurance and proportional reinsurance R0060 Other motor insurance and proportional reinsurance R0070 Marine, aviation and transport insurance and proportional reinsurance R0080 Fire and other damage to property insurance and proportional reinsurance R0090 General liability insurance and proportional reinsurance R0100 Credit and suretyship insurance and proportional reinsurance R0110 Legal expenses insurance and proportional reinsurance R0120 Assistance and proportional reinsurance R0130 Miscellaneous financial loss insurance and proportional reinsurance R0140 Non-proportional health reinsurance R0150 Non-proportional casualty reinsurance R0160 Non-proportional marine, aviation and transport reinsurance R0170 Non-proportional property reinsurance

MCR(L,NL) Result MCR(L,L) Result

C0070 C0080 Linear formula component for life insurance and reinsurance R0200 0 3,164 obligations

Net (of Net (of reinsurance/S Net (of reinsurance/S Net (of PV) best reinsurance/S PV) best reinsurance/S estimate and PV) total estimate and PV) total TP calculated capital at risk TP calculated capital at risk as a whole as a whole

C0090 C0100 C0110 C0120 R0210 Obligations with profit participation - guaranteed benefits 7,806 R0220 Obligations with profit participation - future discretionary benefits 14,189 R0230 Index-linked and unit-linked insurance obligations 0 R0240 Other life (re)insurance and health (re)insurance obligations 0 R0250 Total capital at risk for all life (re)insurance obligations 5,161,319

Overall MCR calculation C0130 R0300 Linear MCR 5,269 R0310 SCR 82,785 R0320 MCR cap 37,253 R0330 MCR floor 20,696 R0340 Combined MCR 20,696 R0350 Absolute floor of the MCR 5,340

R0400 Minimum Capital Requirement 20,696

Notional non-life and life MCR calculation C0140 C0150 R0500 Notional linear MCR 2,105 3,164 R0510 Notional SCR excluding add-on (annual or latest calculation) 33,077 49,708 R0520 Notional MCR cap 14,885 22,369 R0530 Notional MCR floor 8,269 12,427 R0540 Notional combined MCR 8,269 12,427 R0550 Absolute floor of the notional MCR 2,153 3,187

R0560 Notional MCR 8,269 12,427 The Exeter Cash Plan

Solvency and Financial Condition Report

Disclosures

31 December 2019

(Monetary amounts in GBP thousands) General information

Undertaking name The Exeter Cash Plan Undertaking identification code 213800TYI7ORV3TF7T41 Type of code of undertaking LEI Type of undertaking Non-life undertakings Country of authorisation GB Language of reporting en Reporting reference date 31 December 2019 Currency used for reporting GBP Accounting standards IFRS Method of Calculation of the SCR Standard formula Matching adjustment No use of matching adjustment Volatility adjustment No use of volatility adjustment Transitional measure on the risk-free interest rate No use of transitional measure on the risk-free interest rate Transitional measure on technical provisions No use of transitional measure on technical provisions

List of reported templates S.02.01.02 - Balance sheet S.05.01.02 - Premiums, claims and expenses by line of business S.05.02.01 - Premiums, claims and expenses by country S.17.01.02 - Non-Life Technical Provisions S.19.01.21 - Non-Life insurance claims S.23.01.01 - Own Funds S.25.01.21 - Solvency Capital Requirement - for undertakings on Standard Formula S.28.01.01 - Minimum Capital Requirement - Only life or only non-life insurance or reinsurance activity S.02.01.02 Balance sheet Solvency II value Assets C0010 R0030 Intangible assets R0040 Deferred tax assets R0050 Pension benefit surplus R0060 Property, plant & equipment held for own use 0 R0070 Investments (other than assets held for index-linked and unit-linked contracts) 2,005 R0080 Property (other than for own use) 0 R0090 Holdings in related undertakings, including participations 0 R0100 Equities 0 R0110 Equities - listed R0120 Equities - unlisted R0130 Bonds 0 R0140 Government Bonds 0 R0150 Corporate Bonds 0 R0160 Structured notes 0 R0170 Collateralised securities 0 R0180 Collective Investments Undertakings 2,005 R0190 Derivatives R0200 Deposits other than cash equivalents 0 R0210 Other investments 0 R0220 Assets held for index-linked and unit-linked contracts R0230 Loans and mortgages 0 R0240 Loans on policies 0 R0250 Loans and mortgages to individuals R0260 Other loans and mortgages R0270 Reinsurance recoverables from: 0 R0280 Non-life and health similar to non-life 0 R0290 Non-life excluding health 0 R0300 Health similar to non-life 0 R0310 Life and health similar to life, excluding index-linked and unit-linked 0 R0320 Health similar to life R0330 Life excluding health and index-linked and unit-linked R0340 Life index-linked and unit-linked R0350 Deposits to cedants 0 R0360 Insurance and intermediaries receivables 620 R0370 Reinsurance receivables 0 R0380 Receivables (trade, not insurance) 1 R0390 Own shares (held directly) 0

R0400 Amounts due in respect of own fund items or initial fund called up but not yet paid in 0

R0410 Cash and cash equivalents 1,432 R0420 Any other assets, not elsewhere shown R0500 Total assets 4,059 S.02.01.02 Balance sheet

Solvency II value Liabilities C0010 R0510 Technical provisions - non-life 265 R0520 Technical provisions - non-life (excluding health) 0 R0530 TP calculated as a whole 0 R0540 Best Estimate 0 R0550 Risk margin 0 R0560 Technical provisions - health (similar to non-life) 265 R0570 TP calculated as a whole 0 R0580 Best Estimate 211 R0590 Risk margin 54 R0600 Technical provisions - life (excluding index-linked and unit-linked) 0 R0610 Technical provisions - health (similar to life) 0 R0620 TP calculated as a whole R0630 Best Estimate R0640 Risk margin R0650 Technical provisions - life (excluding health and index-linked and unit-linked) 0 R0660 TP calculated as a whole R0670 Best Estimate R0680 Risk margin R0690 Technical provisions - index-linked and unit-linked 0 R0700 TP calculated as a whole R0710 Best Estimate R0720 Risk margin R0740 Contingent liabilities 0 R0750 Provisions other than technical provisions 0 R0760 Pension benefit obligations 0 R0770 Deposits from reinsurers 0 R0780 Deferred tax liabilities 0 R0790 Derivatives 0 R0800 Debts owed to credit institutions 0 R0810 Financial liabilities other than debts owed to credit institutions 0 R0820 Insurance & intermediaries payables 602 R0830 Reinsurance payables 0 R0840 Payables (trade, not insurance) 154 R0850 Subordinated liabilities 0 R0860 Subordinated liabilities not in BOF R0870 Subordinated liabilities in BOF 0 R0880 Any other liabilities, not elsewhere shown R0900 Total liabilities 1,020

R1000 Excess of assets over liabilities 3,039 S.05.01.02 Premiums, claims and expenses by line of business

Non-life

Line of business for: accepted non-proportional Line of Business for: non-life insurance and reinsurance obligations (direct business and accepted proportional reinsurance) reinsurance

C0010 C0020 C0030 C0040 C0050 C0060 C0070 C0080 C0090 C0100 C0110 C0120 C0130 C0140 C0150 C0160 C0200 Premiums written R0110 Gross - Direct Business 3,506 3,506 R0120 Gross - Proportional reinsurance accepted 0 R0130 Gross - Non-proportional reinsurance accepted 0 R0140 Reinsurers' share 0 R0200 Net 3,506 3,506 Premiums earned R0210 Gross - Direct Business 3,501 3,501 R0220 Gross - Proportional reinsurance accepted 0 R0230 Gross - Non-proportional reinsurance accepted 0 R0240 Reinsurers' share 0 R0300 Net 3,501 3,501 Claims incurred R0310 Gross - Direct Business 2,859 2,859 R0320 Gross - Proportional reinsurance accepted 0 R0330 Gross - Non-proportional reinsurance accepted 0 R0340 Reinsurers' share 0 R0400 Net 2,859 2,859 Changes in other technical provisions R0410 Gross - Direct Business 30 30 R0420 Gross - Proportional reinsurance accepted 0 R0430 Gross - Non-proportional reinsurance accepted 0 R0440 Reinsurers' share 0 R0500 Net 30 30

R0550 Expenses incurred 747 747 R1200 Other expenses R1300 Total expenses 747 S.05.02.01 Premiums, claims and expenses by country

Non-life

C0080 C0090 C0100 C0110 C0120 C0130 C0140 Premiums written R0110 Gross - Direct Business 3,506 3,506 R0120 Gross - Proportional reinsurance accepted 0 R0130 Gross - Non-proportional reinsurance accepted 0 R0140 Reinsurers' share 0 R0200 Net 3,506 3,506 Premiums earned R0210 Gross - Direct Business 3,501 3,501 R0220 Gross - Proportional reinsurance accepted 0 R0230 Gross - Non-proportional reinsurance accepted 0 R0240 Reinsurers' share 0 R0300 Net 3,501 3,501 Claims incurred R0310 Gross - Direct Business 2,859 2,859 R0320 Gross - Proportional reinsurance accepted 0 R0330 Gross - Non-proportional reinsurance accepted 0 R0340 Reinsurers' share 0 R0400 Net 2,859 2,859 Changes in other technical provisions R0410 Gross - Direct Business 30 30 R0420 Gross - Proportional reinsurance accepted 0 R0430 Gross - Non-proportional reinsurance accepted 0 R0440 Reinsurers' share 0 R0500 Net 30 30

R0550 Expenses incurred 747 0 747 R1200 Other expenses 0 R1300 Total expenses 747 S.17.01.02 Non-Life Technical Provisions

Direct business and accepted proportional reinsurance Accepted non-proportional reinsurance

C0020 C0030 C0040 C0050 C0060 C0070 C0080 C0090 C0100 C0110 C0120 C0130 C0140 C0150 C0160 C0170 C0180 R0010 Technical provisions calculated as a whole 0 0

Total Recoverables from reinsurance/SPV and Finite Re after R0050 the adjustment for expected losses due to counterparty default 0 associated to TP calculated as a whole

Technical provisions calculated as a sum of BE and RM Best estimate Premium provisions R0060 Gross -87 -87 Total recoverable from reinsurance/SPV and Finite Re R0140 after the adjustment for expected losses due to 0 counterparty default R0150 Net Best Estimate of Premium Provisions -87 -87

Claims provisions R0160 Gross 298 298 Total recoverable from reinsurance/SPV and Finite Re R0240 after the adjustment for expected losses due to 0 counterparty default R0250 Net Best Estimate of Claims Provisions 298 298

R0260 Total best estimate - gross 211 211 R0270 Total best estimate - net 211 211

R0280 Risk margin 54 54

Amount of the transitional on Technical Provisions R0290 Technical Provisions calculated as a whole 0 R0300 Best estimate 0 R0310 Risk margin 0

R0320 Technical provisions - total 265 265 Recoverable from reinsurance contract/SPV and R0330 Finite Re after the adjustment for expected losses due to 0 0 counterparty default - total Technical provisions minus recoverables from R0340 265 265 reinsurance/SPV and Finite Re - total S.19.01.21 Non-Life insurance claims

Total Non-life business

Z0020 Accident year / underwriting year Accident Year

Gross Claims Paid (non-cumulative) (absolute amount)

C0010 C0020 C0030 C0040 C0050 C0060 C0070 C0080 C0090 C0100 C0110 C0170 C0180 Year Development year In Current Sum of years 0 1 2 3 4 5 6 7 8 9 10 & + year (cumulative) R0100 Prior 0 0 0 R0160 2010 0 0 0 0 0 0 0 0 0 0 0 0 R0170 2011 0 0 0 0 0 0 0 0 0 0 0 R0180 2012 0 0 0 0 0 0 0 0 0 0 R0190 2013 0 0 0 0 0 0 0 0 0 R0200 2014 0 0 0 0 0 0 0 0 R0210 2015 0 259 0 0 0 0 259 R0220 2016 2,686 312 0 0 0 2,998 R0230 2017 2,880 262 0 0 3,141 R0240 2018 2,750 245 245 2,996 R0250 2019 2,621 2,621 2,621 R0260 Total 2,866 12,015

Tier 1 Tier 1 Basic own funds before deduction for participations in other financial sector as foreseen in article 68 of Delegated Regulation 2015/35 Total Tier 2 Tier 3 unrestricted restricted C0010 C0020 C0030 C0040 C0050 R0010 Ordinary share capital (gross of own shares) 5,000 5,000 0 R0030 Share premium account related to ordinary share capital 0 0 0 R0040 Initial funds, members' contributions or the equivalent basic own-fund item for mutual and mutual-type undertakings 0 0 0 R0050 Subordinated mutual member accounts 0 0 0 0 R0070 Surplus funds 0 0 R0090 Preference shares 0 0 0 0 R0110 Share premium account related to preference shares 0 0 0 0 R0130 Reconciliation reserve -1,961 -1,961 R0140 Subordinated liabilities 0 0 0 0 R0160 An amount equal to the value of net deferred tax assets 0 0 R0180 Other own fund items approved by the supervisory authority as basic own funds not specified above 0 0 0 0 0

R0220 Own funds from the financial statements that should not be represented by the reconciliation reserve and do not meet the criteria to be classified as Solvency II own funds 0

R0230 Deductions for participations in financial and credit institutions 0

R0290 Total basic own funds after deductions 3,039 3,039 0 0 0

Available and eligible own funds R0500 Total available own funds to meet the SCR 3,039 3,039 0 0 0 R0510 Total available own funds to meet the MCR 3,039 3,039 0 0 R0540 Total eligible own funds to meet the SCR 3,039 3,039 0 0 0 R0550 Total eligible own funds to meet the MCR 3,039 3,039 0 0

R0580 SCR 739 R0600 MCR 2,153 R0620 Ratio of Eligible own funds to SCR 411.41% R0640 Ratio of Eligible own funds to MCR 141.12%

Reconcilliation reserve C0060 R0700 Excess of assets over liabilities 3,039 R0710 Own shares (held directly and indirectly) 0 R0720 Foreseeable dividends, distributions and charges R0730 Other basic own fund items 5,000 R0740 Adjustment for restricted own fund items in respect of matching adjustment portfolios and ring fenced funds 0 R0760 Reconciliation reserve -1,961

Expected profits R0770 Expected profits included in future premiums (EPIFP) - Life business R0780 Expected profits included in future premiums (EPIFP) - Non- life business 93 R0790 Total Expected profits included in future premiums (EPIFP) 93 S.25.01.21 Solvency Capital Requirement - for undertakings on Standard Formula

Gross solvency USP Simplifications capital requirement

C0110 C0090 C0120 R0010 Market risk 35 R0020 Counterparty default risk 177 R0030 Life underwriting risk 0 R0040 Health underwriting risk 554 R0050 Non-life underwriting risk 0 R0060 Diversification -132 USP Key

R0070 Intangible asset risk 0 For life underwriting risk: 1 - Increase in the amount of annuity benefits R0100 Basic Solvency Capital Requirement 634 9 - None

For health underwriting risk: Calculation of Solvency Capital Requirement C0100 1 - Increase in the amount of annuity R0130 Operational risk 105 benefits 2 - Standard deviation for NSLT health R0140 Loss-absorbing capacity of technical provisions 0 premium risk R0150 Loss-absorbing capacity of deferred taxes 0 3 - Standard deviation for NSLT health gross premium risk R0160 Capital requirement for business operated in accordance with Art. 4 of Directive 2003/41/EC 0 4 - Adjustment factor for non-proportional R0200 Solvency Capital Requirement excluding capital add-on 739 reinsurance 5 - Standard deviation for NSLT health R0210 Capital add-ons already set 0 reserve risk R0220 Solvency capital requirement 739 9 - None

For non-life underwriting risk: Other information on SCR 4 - Adjustment factor for non-proportional reinsurance R0400 Capital requirement for duration-based equity risk sub-module 0 6 - Standard deviation for non-life premium risk R0410 Total amount of Notional Solvency Capital Requirements for remaining part 0 7 - Standard deviation for non-life gross R0420 Total amount of Notional Solvency Capital Requirements for ring fenced funds 0 premium risk 8 - Standard deviation for non-life R0430 Total amount of Notional Solvency Capital Requirements for matching adjustment portfolios 0 reserve risk R0440 Diversification effects due to RFF nSCR aggregation for article 304 0 9 - None

Approach to tax rate C0109 R0590 Approach based on average tax rate Not applicable

Linear formula component for non-life insurance and reinsurance obligations C0010

R0010 MCRNL Result 175

Net (of Net (of reinsurance) reinsurance/SPV) best written premiums in estimate and TP the last 12 months calculated as a whole

C0020 C0030 R0020 Medical expense insurance and proportional reinsurance 211 3,506 R0030 Income protection insurance and proportional reinsurance 0 R0040 Workers' compensation insurance and proportional reinsurance 0 R0050 Motor vehicle liability insurance and proportional reinsurance 0 R0060 Other motor insurance and proportional reinsurance 0 R0070 Marine, aviation and transport insurance and proportional reinsurance 0 R0080 Fire and other damage to property insurance and proportional reinsurance 0 R0090 General liability insurance and proportional reinsurance 0 R0100 Credit and suretyship insurance and proportional reinsurance 0 R0110 Legal expenses insurance and proportional reinsurance 0 R0120 Assistance and proportional reinsurance 0 R0130 Miscellaneous financial loss insurance and proportional reinsurance 0 R0140 Non-proportional health reinsurance 0 R0150 Non-proportional casualty reinsurance 0 R0160 Non-proportional marine, aviation and transport reinsurance 0 R0170 Non-proportional property reinsurance 0

Linear formula component for life insurance and reinsurance obligations C0040

R0200 MCRL Result 0

Net (of Net (of reinsurance/SPV) best reinsurance/SPV) total estimate and TP capital at risk calculated as a whole

C0050 C0060 R0210 Obligations with profit participation - guaranteed benefits R0220 Obligations with profit participation - future discretionary benefits R0230 Index-linked and unit-linked insurance obligations R0240 Other life (re)insurance and health (re)insurance obligations R0250 Total capital at risk for all life (re)insurance obligations

Overall MCR calculation C0070 R0300 Linear MCR 175 R0310 SCR 739 R0320 MCR cap 332 R0330 MCR floor 185 R0340 Combined MCR 185 R0350 Absolute floor of the MCR 2,153

R0400 Minimum Capital Requirement 2,153 Exeter Friendly Society Limited

Solvency and Financial Condition Report

Disclosures

31 December 2019

(Monetary amounts in GBP thousands) General information

Participating undertaking name Exeter Friendly Society Limited Group identification code 213800V19RLONY7XIL94 Type of code of group LEI Country of the group supervisor GB Language of reporting en Reporting reference date 31 December 2019 Currency used for reporting GBP Accounting standards IFRS Method of Calculation of the group SCR Standard formula Method of group solvency calculation Method 1 is used exclusively Matching adjustment No use of matching adjustment Volatility adjustment No use of volatility adjustment Transitional measure on the risk-free interest rate No use of transitional measure on the risk-free interest rate Transitional measure on technical provisions No use of transitional measure on technical provisions

List of reported templates S.02.01.02 - Balance sheet S.05.01.02 - Premiums, claims and expenses by line of business S.05.01.02 - Premiums, claims and expenses by line of business S.05.02.01 - Premiums, claims and expenses by country S.05.02.01 - Premiums, claims and expenses by country S.23.01.22 - Own Funds S.25.01.22 - Solvency Capital Requirement - for groups on Standard Formula S.32.01.22 - Undertakings in the scope of the group S.02.01.02 Balance sheet Solvency II value Assets C0010 R0030 Intangible assets 0 R0040 Deferred tax assets 0 R0050 Pension benefit surplus 974 R0060 Property, plant & equipment held for own use 3,213 R0070 Investments (other than assets held for index-linked and unit-linked contracts) 137,025 R0080 Property (other than for own use) 0 R0090 Holdings in related undertakings, including participations 0 R0100 Equities 0 R0110 Equities - listed 0 R0120 Equities - unlisted 0 R0130 Bonds 45,779 R0140 Government Bonds 45,779 R0150 Corporate Bonds 0 R0160 Structured notes 0 R0170 Collateralised securities 0 R0180 Collective Investments Undertakings 91,246 R0190 Derivatives 0 R0200 Deposits other than cash equivalents 0 R0210 Other investments 0 R0220 Assets held for index-linked and unit-linked contracts 0 R0230 Loans and mortgages 0 R0240 Loans on policies 0 R0250 Loans and mortgages to individuals 0 R0260 Other loans and mortgages 0 R0270 Reinsurance recoverables from: -39,586 R0280 Non-life and health similar to non-life 0 R0290 Non-life excluding health 0 R0300 Health similar to non-life 0 R0310 Life and health similar to life, excluding index-linked and unit-linked -39,586 R0320 Health similar to life -39,921 R0330 Life excluding health and index-linked and unit-linked 335 R0340 Life index-linked and unit-linked 0 R0350 Deposits to cedants 0 R0360 Insurance and intermediaries receivables 3,449 R0370 Reinsurance receivables 834 R0380 Receivables (trade, not insurance) 348 R0390 Own shares (held directly) 0

R0400 Amounts due in respect of own fund items or initial fund called up but not yet paid in 0

R0410 Cash and cash equivalents 11,702 R0420 Any other assets, not elsewhere shown 0 R0500 Total assets 117,960 S.02.01.02 Balance sheet

Solvency II value Liabilities C0010 R0510 Technical provisions - non-life 8,751 R0520 Technical provisions - non-life (excluding health) 0 R0530 TP calculated as a whole 0 R0540 Best Estimate 0 R0550 Risk margin 0 R0560 Technical provisions - health (similar to non-life) 8,751 R0570 TP calculated as a whole 0 R0580 Best Estimate 8,037 R0590 Risk margin 714 R0600 Technical provisions - life (excluding index-linked and unit-linked) -91,269 R0610 Technical provisions - health (similar to life) -91,600 R0620 TP calculated as a whole 0 R0630 Best Estimate -122,522 R0640 Risk margin 30,922 R0650 Technical provisions - life (excluding health and index-linked and unit-linked) 331 R0660 TP calculated as a whole 0 R0670 Best Estimate -677 R0680 Risk margin 1,008 R0690 Technical provisions - index-linked and unit-linked 0 R0700 TP calculated as a whole 0 R0710 Best Estimate 0 R0720 Risk margin 0 R0740 Contingent liabilities 0 R0750 Provisions other than technical provisions 0 R0760 Pension benefit obligations 140 R0770 Deposits from reinsurers 0 R0780 Deferred tax liabilities 0 R0790 Derivatives 0 R0800 Debts owed to credit institutions 0 R0810 Financial liabilities other than debts owed to credit institutions 0 R0820 Insurance & intermediaries payables 2,185 R0830 Reinsurance payables 962 R0840 Payables (trade, not insurance) 3,755 R0850 Subordinated liabilities 0 R0860 Subordinated liabilities not in BOF 0 R0870 Subordinated liabilities in BOF 0 R0880 Any other liabilities, not elsewhere shown 0 R0900 Total liabilities -75,476

R1000 Excess of assets over liabilities 193,436 S.05.01.02 Premiums, claims and expenses by line of business

Non-life

Line of business for: accepted non-proportional Line of Business for: non-life insurance and reinsurance obligations (direct business and accepted proportional reinsurance) reinsurance

C0010 C0020 C0030 C0040 C0050 C0060 C0070 C0080 C0090 C0100 C0110 C0120 C0130 C0140 C0150 C0160 C0200 Premiums written R0110 Gross - Direct Business 40,475 40,475 R0120 Gross - Proportional reinsurance accepted 0 R0130 Gross - Non-proportional reinsurance accepted 0 R0140 Reinsurers' share 0 R0200 Net 40,475 40,475 Premiums earned R0210 Gross - Direct Business 40,979 40,979 R0220 Gross - Proportional reinsurance accepted 0 R0230 Gross - Non-proportional reinsurance accepted 0 R0240 Reinsurers' share 0 R0300 Net 40,979 40,979 Claims incurred R0310 Gross - Direct Business 29,950 29,950 R0320 Gross - Proportional reinsurance accepted 0 R0330 Gross - Non-proportional reinsurance accepted 0 R0340 Reinsurers' share 0 R0400 Net 29,950 29,950 Changes in other technical provisions R0410 Gross - Direct Business 120 120 R0420 Gross - Proportional reinsurance accepted 0 R0430 Gross - Non-proportional reinsurance accepted 0 R0440 Reinsurers' share 0 R0500 Net 120 120

R0550 Expenses incurred 10,051 10,051 R1200 Other expenses 1,583 R1300 Total expenses 11,634 S.05.01.02 Premiums, claims and expenses by line of business

Life

Line of Business for: life insurance obligations Life reinsurance obligations

Non-life

C0080 C0090 C0100 C0110 C0120 C0130 C0140 Premiums written R0110 Gross - Direct Business 36,979 648 494 270 258 94 38,743 R0120 Gross - Proportional reinsurance accepted 0 R0130 Gross - Non-proportional reinsurance accepted 0 R0140 Reinsurers' share 0 R0200 Net 36,979 648 494 270 258 94 38,743 Premiums earned R0210 Gross - Direct Business 37,435 657 501 274 261 95 39,223 R0220 Gross - Proportional reinsurance accepted 0 R0230 Gross - Non-proportional reinsurance accepted 0 R0240 Reinsurers' share 0 R0300 Net 37,435 657 501 274 261 95 39,223 Claims incurred R0310 Gross - Direct Business 27,389 475 362 198 189 69 28,681 R0320 Gross - Proportional reinsurance accepted 0 R0330 Gross - Non-proportional reinsurance accepted 0 R0340 Reinsurers' share 0 R0400 Net 27,389 475 362 198 189 69 28,681 Changes in other technical provisions R0410 Gross - Direct Business 111 2 1 1 1 0 116 R0420 Gross - Proportional reinsurance accepted 0 R0430 Gross - Non-proportional reinsurance accepted 0 R0440 Reinsurers' share 0 R0500 Net 111 2 1 1 1 0 116

R0550 Expenses incurred 7,820 137 104 57 54 20 8,193 R1200 Other expenses 1,583 R1300 Total expenses 9,776 S.05.02.01 Premiums, claims and expenses by country

Life

R1900 Expenses incurred 24,218 24,218 R2500 Other expenses 1,943 R2600 Total expenses 26,161 S.23.01.22 Own Funds

Tier 1 Tier 1 Basic own funds before deduction for participations in other financial sector Total Tier 2 Tier 3 unrestricted restricted C0010 C0020 C0030 C0040 C0050 R0010 Ordinary share capital (gross of own shares) 0 0 0 R0020 Non-available called but not paid in ordinary share capital at group level 0 R0030 Share premium account related to ordinary share capital 0 0 0 R0040 Initial funds, members' contributions or the equivalent basic own-fund item for mutual and mutual-type undertakings 0 0 0 R0050 Subordinated mutual member accounts 0 0 0 0 R0060 Non-available subordinated mutual member accounts at group level 0 R0070 Surplus funds 193,436 193,436 R0080 Non-available surplus funds at group level 0 0 R0090 Preference shares 0 0 0 0 R0100 Non-available preference shares at group level 0 R0110 Share premium account related to preference shares 0 0 0 0 R0120 Non-available share premium account related to preference shares at group level 0 R0130 Reconciliation reserve -110,868 -110,868 R0140 Subordinated liabilities 0 0 0 0 R0150 Non-available subordinated liabilities at group level 0 R0160 An amount equal to the value of net deferred tax assets 0 0 R0170 The amount equal to the value of net deferred tax assets not available at the group level 0 0 R0180 Other items approved by supervisory authority as basic own funds not specified above 0 0 0 0 0 R0190 Non available own funds related to other own funds items approved by supervisory authority 0 R0200 Minority interests (if not reported as part of a specific own fund item) 0 R0210 Non-available minority interests at group level 0

R0220 Own funds from the financial statements that should not be represented by the reconciliation reserve and do not meet the criteria to be classified as Solvency II own funds

R0230 Deductions for participations in other financial undertakings, including non-regulated undertakings carrying out financial activities 0 R0240 whereof deducted according to art 228 of the Directive 2009/138/EC 0 R0250 Deductions for participations where there is non-availability of information (Article 229) 0 R0260 Deduction for participations included by using D&A when a combination of methods is used 0 R0270 Total of non-available own fund items 0 0 0 0 0 R0280 Total deductions 0 0 0 0 0

R0290 Total basic own funds after deductions 82,568 82,568 0 0 0

Ancillary own funds R0300 Unpaid and uncalled ordinary share capital callable on demand 0 R0310 Unpaid and uncalled initial funds, members' contributions or the equivalent basic own fund item for mutual and mutual - type undertakings, callable on demand 0 R0320 Unpaid and uncalled preference shares callable on demand 0 R0330 A legally binding commitment to subscribe and pay for subordinated liabilities on demand 0 R0340 Letters of credit and guarantees under Article 96(2) of the Directive 2009/138/EC 0 R0350 Letters of credit and guarantees other than under Article 96(2) of the Directive 2009/138/EC 0 R0360 Supplementary members calls under first subparagraph of Article 96(3) of the Directive 2009/138/EC 0 R0370 Supplementary members calls - other than under first subparagraph of Article 96(3) of the Directive 2009/138/EC 0 R0380 Non available ancillary own funds at group level 0 R0390 Other ancillary own funds 0 R0400 Total ancillary own funds 0 0 0

Own funds of other financial sectors R0410 Credit Institutions, investment firms, financial institutions, alternative investment fund managers, UCITS management companies 0 R0420 Institutions for occupational retirement provision 0 R0430 Non regulated entities carrying out financial activities 0 R0440 Total own funds of other financial sectors 0 0 0 0 0 S.23.01.22 Own Funds

Tier 1 Tier 1 Basic own funds before deduction for participations in other financial sector Total Tier 2 Tier 3 unrestricted restricted C0010 C0020 C0030 C0040 C0050 Own funds when using the D&A, exclusively or in combination of method 1 R0450 Own funds aggregated when using the D&A and combination of method 0 R0460 Own funds aggregated when using the D&A and combination of method net of IGT 0

R0520 Total available own funds to meet the consolidated group SCR (excluding own funds from other financial sector and from the undertakings included via D&A ) 82,568 82,568 0 0 0 R0530 Total available own funds to meet the minimum consolidated group SCR 82,568 82,568 0 0 R0560 Total eligible own funds to meet the consolidated group SCR (excluding own funds from other financial sector and from the undertakings included via D&A ) 82,568 82,568 0 0 0 R0570 Total eligible own funds to meet the minimum consolidated group SCR (group) 82,568 82,568 0 0

R0610 Minimum consolidated Group SCR 82,568 R0650 Ratio of Eligible own funds to Minimum Consolidated Group SCR 100.00% R0660 Total eligible own funds to meet the group SCR (including own funds from other financial sector and from the undertakings included via D&A ) 82,568 82,568 0 0 0 R0680 Group SCR 82,753 R0690 Ratio of Eligible own funds to group SCR including other financial sectors and the undertakings included via D&A 99.78%

Reconcilliation reserve C0060 R0700 Excess of assets over liabilities 193,436 R0710 Own shares (held directly and indirectly) R0720 Forseeable dividends, distributions and charges R0730 Other basic own fund items 193,436 R0740 Adjustment for restricted own fund items in respect of matching adjustment portfolios and ring fenced funds 110,868 R0750 Other non available own funds R0760 Reconciliation reserve -110,868

Expected profits R0770 Expected profits included in future premiums (EPIFP) - Life business 118,026 R0780 Expected profits included in future premiums (EPIFP) - Non- life business 1,533 R0790 Total Expected profits included in future premiums (EPIFP) 119,559 S.25.01.22 Solvency Capital Requirement - for groups on Standard Formula

Gross solvency capital USP Simplifications requirement C0110 C0090 C0120 R0010 Market risk 30,807 R0020 Counterparty default risk 2,329 R0030 Life underwriting risk 1,904 R0040 Health underwriting risk 69,126 R0050 Non-life underwriting risk 0 R0060 Diversification -20,411

USP Key R0070 Intangible asset risk 0 For life underwriting risk: 1 - Increase in the amount of annuity R0100 Basic Solvency Capital Requirement 83,756 benefits 9 - None

Calculation of Solvency Capital Requirement C0100 For health underwriting risk: 1 - Increase in the amount of annuity R0130 Operational risk 2,303 benefits R0140 Loss-absorbing capacity of technical provisions -3,306 2 - Standard deviation for NSLT health premium risk R0150 Loss-absorbing capacity of deferred taxes 0 3 - Standard deviation for NSLT health gross R0160 Capital requirement for business operated in accordance with Art. 4 of Directive 2003/41/EC 0 premium risk 4 - Adjustment factor for non-proportional R0200 Solvency Capital Requirement excluding capital add-on 82,753 reinsurance R0210 Capital add-ons already set 0 5 - Standard deviation for NSLT health reserve risk R0220 Solvency capital requirement for undertakings under consolidated method 82,753 9 - None

For non-life underwriting risk: Other information on SCR 4 - Adjustment factor for non-proportional R0400 Capital requirement for duration-based equity risk sub-module 0 reinsurance 6 - Standard deviation for non-life R0410 Total amount of Notional Solvency Capital Requirements for remaining part 0 premium risk R0420 Total amount of Notional Solvency Capital Requirements for ring fenced funds 82,568 7 - Standard deviation for non-life gross premium risk R0430 Total amount of Notional Solvency Capital Requirements for matching adjustment portfolios 0 8 - Standard deviation for non-life R0440 Diversification effects due to RFF nSCR aggregation for article 304 0 reserve risk R0470 Minimum consolidated group solvency capital requirement 82,568 9 - None

Information on other entities R0500 Capital requirement for other financial sectors (Non-insurance capital requirements) 0 Credit institutions, investment firms and financial institutions, alternative investment funds R0510 0 managers, UCITS management companies R0520 Institutions for occupational retirement provisions 0 R0530 Capital requirement for non- regulated entities carrying out financial activities 0 R0540 Capital requirement for non-controlled participation requirements 0 R0550 Capital requirement for residual undertakings 0

Overall SCR R0560 SCR for undertakings included via D&A 0 R0570 Solvency capital requirement 82,753 S.32.01.22

Undertakings in the scope of the group

Type of code Category Identification code of the Country of the ID of the Legal Name of the undertaking Type of undertaking Legal form (mutual/non Supervisory Authority undertaking undertaking mutual)

Row C0010 C0020 C0030 C0040 C0050 C0060 C0070 C0080

1 GB 213800V19RLONY7XIL94 LEI Exeter Friendly Society Limited Composite undertaking Friendly Society Mutual Prudential Regulation Authority

2 GB 213800TYI7ORV3TF7T41 LEI The Exeter Cash Plan Non life insurance undertaking Unlimited Company Non-mutual Prudential Regulation Authority Insurance holding company as defined in Article 212(1) (f) of Directive 3 GB 009567930 Specific code Exeter Cash Plan Holdings Limited Limited Company Non-mutual 2009/138/EC S.32.01.22

Undertakings in the scope of the group

Inclusion in the scope of Group Criteria of influence Group solvency calculation supervision

% used for the Type of code Proportional share Date of decision Identification code of the establishment of Method used and under method 1, treatment of the Country of the ID of the % capital share % voting rights Other criteria Level of influence used for group YES/NO if art. 214 is undertaking consolidated undertaking undertaking solvency calculation applied accounts

Row C0010 C0020 C0030 C0180 C0190 C0200 C0210 C0220 C0230 C0240 C0250 C0260

1 GB 213800V19RLONY7XIL94 LEI Dominant Included in the scope Method 1: Full consolidation

2 GB 213800TYI7ORV3TF7T41 LEI 100.00% 100.00% 100.00% Dominant 100.00% Included in the scope Method 1: Full consolidation

3 GB 009567930 Specific code 100.00% 100.00% 100.00% Dominant 100.00% Included in the scope Method 1: Full consolidation